There are many different ways historical films 'manipulate' events for entertainment value. Some of these are ostentatious, while others are so subtle you might not immediately understand WHY the manipulations are considered important/problematic.

One very recent example from my area has to do with two made for television films about Bloody Sunday. In 1972 British First Para opened fire on a civil rights march and killed 14 people (well, 13, though one more died due to complications some time later). If you're not familiar with the event, it's worth doing some quick reading online, but I'll try to cover salient points which speak to your question.

About the movies: the more well known is Bloody Sunday (2002), a production which aired on ITV but was also featured at Sundance. It stars James Nesbitt (a rather well known Northern Irish actor) as Ivan Cooper, an SDLP member. The SDLP are a social democratic party with sympathy for the nationalist cause in NI. The film focuses primarily on the role of the organizers and political campaigners involved with the civil rights march.

The other film is Sunday (2002), a Channel 4 production which aired about a week after Bloody Sunday. Sunday was written by Jimmy McGovern, who had a few things to say about the difference in perspectives between the films. He felt that Bloody Sunday's focus on the march leaders hurt the films ability to accurately portray the most important moments of the day.

Now here's why it matters: Bloody Sunday was an adaptation of the book Eye Witness Bloody Sunday, a recollection by Don Mullan. I recommend the book if you find yourself intrigued by the subject matter, but the important thing is the historical impact of the work. As you can imagine, the original inquiry into the shootings is widely considered a whitewash. No soldiers were charged and many of the murdered civilians were accused of PIRA sympathy. Mullan's novel came out in 1997, during a renewed effort by the families of the victims for justice. It's hard to find a lot of official sourcing on what pressures forced Tony Blair to open another inquiry, but the BBC and other news sources cite the public reception of Mullan's novel. However, as this isn't an academic source, obviously take it with some salt. In any event the second inquiry led to a formal apology, a clearing of the victims' names, and the possibility of legal action against the soldiers responsible (though this last point is still ongoing).

The point here is that Mullan's book has a heavy focus on the events of the day as they pertained to the victims. Now, Mullan co-produced the adaptation, so it's not like the creators were being unfair to the material. It's more that McGovern feels that Bloody Sunday's focus on the higher ups allowed Greengrass to avoid doing serious, indepth interviews with people affected by the day.

Note: this doesn't necessarily mean the film is less "true", though it does raise an interesting question about how something as simple as perspective can skew a viewers understanding of historical subject matter. In order to tell his story to the best of his abilities, McGovern conducted local interviews for a period of several months leading up to filming, and the focus of his film reflects the data he collected. Greengrass utilized source material and official accounts, and a fair amount of screen-time is spent documenting the march itself, including its organization and the different conflicting personalities of the people involved. Ultimately, we get two films with a high level of accuracy - the on-location filming, the great care taken to portray events in the actual sequence, etc - and without a doubt both are making their respective political points. I just find it interesting that the controversy between the filmmakers isn't about changing events or misrepresenting characters to strengthen whatever thematic or political point the film makes. Instead, the controversy is over HOW the points are made, and whether or not the best way to cover the events is through an everyman's eyes or a political leader.

In terms of sources, I recommend seeing the films themselves, as this answer reads more like a film critique than a highly academic answer. However, for the more important historical context (including the claims about the inquiries, the shootings themselves, and the events of the day) I can recommend several things. The aforementioned Mullan book Eye Witness Bloody Sunday; Douglas Murray's Bloody Sunday (or if you're a real masochist, you can order and read the actual transcript from the original Saville Inquiry); David McKittrick's Lost Lives; and finally, read throughs of the BBC's critical response to both films is quite enlightening, in terms of directly addressing your question.

I don't mean to be obtuse or anything, but who cares? The purpose of art is not to provide a precise mirror to life, that's what we have life for. I could hardly give less of a shit about whether Gladiator has much to do with the "real" Roman world. The Iliad, literally the first piece of "western" literature, presents a fantasy world of mixed setting and made-up setting that corresponded to no reality, but who in his right mind cares, when the themes and messages--to say nothing of the beauty of the verse itself--are what's important? No one would say the Iliad isn't a great poem because it's not realistic. Filmmakers, like any artists, are not in the business of being pedantically "accurate," a tern that gets thrown around without very much meaning. I would go so far as to say that to forget what art is is an especially cardinal sin for a historian. It's bad enough in an ordinary person, but in a historian it means he's lost sight of his humanism, a foundational concept in the discipline.