What are stories?

There is something about stories that reveals truth which cannot be learned systematically in a lab, raising the question which for me, at least, has been unsettling: where do stories come from? Are they real simply because we create them and bring them into being? Are they, perhaps, snapshots of that reality extrinsic to our material universe that we can only dimly see, as in a glass?

If God is the only Being Who can create “ex nihilo” (“out of nothing”), than has He already conceived of every elf, every unicorn, every faun? Are such story creatures, in fact, real? I dare say it is going too far to claim that they walk upon this earth physically, but perhaps, just as truth really does exist within the imaginary construct and outlines of a sequence of events labeled “story,” fairies and centaurs, too, exist in essence within the substance of earthly forms. Perhaps, when God created butterflies, he was diffusing the qualities of sprites and dryads.