What is the difference between story and reality? According to Mark Twain: "Fiction is obliged to stick to possibilities. Truth isn't."
Tom Clancy made a similar observation: "The difference between fiction and reality? Fiction has to make sense." However, he also commented on the overlap between the two: "I've made up stuff that's turned out to be real, that's the spooky part."
In his superb filmmaking masterclass last month, Chris Jones said: "The brain cannot tell the difference between a story and reality." That is why we cry watching a sad movie and scream watching horror. He also said: "Stories are about communicating truths not facts."
My take on it is this: Reality is a tangled knot made from an infinite number of threads. The full blinding complexity and intensity of it is available for us to experience in the 'now'. But as soon as events have past and we look back on what has happened, we start to order our memories into a narrative. From the tangle, we extract a single thread. That becomes the reality of our past.
As storytellers we do the same thing - extracting one thread from the mass of possibilities, cutting it to make a beginning and cutting it again to make an end. Then we present that to our audience.