Folktale (noun) :

1.	a tale or legend originating and traditional among a people or folk, esp. one forming part of the oral tradition of the common people.

2.	any belief or story passed on traditionally, esp. one considered to be false or based on superstition.

History
The concept of folklore developed as part of the 19th century ideology of romantic nationalism, leading to the reshaping of oral traditions to serve modern ideological goals; only in the 20th century did ethographers begin to attempt to record folklore without overt political goals.

The term was coined in 1846 by an Englishman, William Thoms, who wanted to use an Anglo-Saxon term for what was then called "popular antiquities." Johann Gottfried von Herder first advocated the deliberate recording and preservation of folklore to document the authentic spirit, tradition, and identity of the German people; the belief that there can be such authenticity is one of the tenets of the romantic nationalism which Herder developed.

This is just a start, so feel free to add as much or as little to it as you like. Let's keep it somewhat serious.