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Legends are tales that, because of the tie to a historical event or location, are believable, though not necessarily believed. For the purpose of the study of legends, in the academic discipline of folkloristics, the truth value of legends is irrelevant because, whether the story told is true or not, the fact that the story is being told at all allows scholars to use it as commentary upon the cultures that produce or circulate the legends.
Hippolyte Delehaye, (in his Preface to The Legends of the Saints: An Introduction to Hagiography, 1907) distinguished legend from myth: "The legend, on the other hand, has, of necessity, some historical or topographical connection. It refers imaginary events to some real personage, or it localizes romantic stories in some definite spot."
From the moment a legend is retold as fiction its authentic legendary qualities begin to fade and recede: in The Legend of Sleepy Hollow, Washington Irving transformed a local Hudson River Valley legend into a literary anecdote with "Gothic" overtones, which actually tended to diminish its character as genuine legend.
Stories that exceed the boundaries of "realism" are called "fables". For example, the talking animal formula of Aesop identifies his brief stories as fables, not legends. The parable of the Prodigal Son would be a legend if it were told as having actually happened to a specific son of a historical father. If it included an ass that gave sage advice to the Prodigal Son it would be a fable.
Legend may be transmitted orally, passed on person-to-person, or, in the original sense, through written text. Jacob de Voragine's Legenda Aurea or "The Golden Legend" comprises a series of vitae or instructive biographical narratives, tied to the liturgical calendar of the Roman Catholic Church. They are presented as lives of the saints, but the profusion of miraculous happenings and above all their uncritical context are characteristics of hagiography. The Legenda was intended to inspire extemporized homilies and sermons appropriate to the saint of the day.
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