myth n.

1. a traditional or legendary story, esp. one that involves gods and heroes and explains a cultural practice or natural phenomenon.
2. stories of this kind collectively.
3. an invented story, fictitious person, etc.: His account of the event is pure myth.
4. a belief or set of beliefs, often unproven or false, that have accrued around a person, phenomenon, or institution: myths of racial superiority.
[1820–30; < Late Latin mȳthos < Greek mŷthos story, word]
syn: See legend.
Random House Kernerman Webster’s College Dictionary, © 2010 K Dictionaries Ltd. Copyright 2005, 1997, 1991 by Random House, Inc. All rights reserved.
Most people seem to use the word myth in the sense of numbers 2, 3, and 4 above, but definition 1 is much more interesting for fiction writers (and readers). Especially those of us who love the paranormal. Much of our writing/reading revolves around myth and folklore, often re-examined or reworked for a modern audience. Myth in this sense isn’t concerned with historical truths or facts. It’s concerned with inner truth and it speaks to some aspect of human nature or Nature herself.