Before the written/recorded word, stories were passed on by word of mouth. The Iliad, The Odyssey; there is roughly a 300 year gap in between when Iceland was settled and when the sagas were written; obviously in between that time, the stories were passed on verbally.
It is easier to remember a story that is extraordinary than a story that is ordinary. In order that the stories might be passed on from one generation to the next, the oral versions of these stories were probably embellished.
Imagine you're lost in the woods, you set up a base camp and you want to go looking for food, but this is unfamiliar territory so as you go exploring, you leave signs along the way so that you might find your way back to base. Similarly, the old storytellers left extraordinary clues to themselves and to future storytellers, in the form of fantastic embellishment such as trolls, dragons, talking horses or superhuman feats, so that they could navigate the story from beginning to end.
At least this is my hypothesis! When you have points A-B-C-D, it is easier to navigate than if you only have points A and B. Once the stories were finally written down in books, the elements of fantasy had become an integral part of the story and so they stuck. Memorization works better not when you memorize verbatim but when you memorize the big bold A-B-C-D points, and the in between stuff seems to fill itself in on its own.
The reason that there are fewer and fewer bold storytellers is because people have forgotten that a story is first and foremost an oral tradition. Rather than storytellers we have "writers." Writers work first and foremost with the written word. William S Burroughs for example, is a very bold writer, but basically incoherent as a storyteller.
Plato was right that books and the written word essentially weaken us and make us less bold. We become reliant on the word. The old storytellers were both bold and coherent.