Pre-industrial Europeans had a long-standing, vibrant belief system in a wide variety of supernatural entities. If by "mythic tales" you mean the stories of Greek and Roman gods - Christians of the early medieval period would have tended to see them as false gods and/or demons attempting to confuse and distract people from the True Faith. But that may not be what you mean; you are likely referring to the sorts of legends that come down to us from primary, medieval sources, stories that involve many sorts of fantastic creatures and beings.

Every society has its skeptics, but in general, during the medieval period, there was a widespread belief if not assumption that the world was populated by all sorts of things that we know call fairies, trolls, or elves. Giants are a bit of a different matter since most people would have believed that they were confined to an ancient time when they helped shape the landscape and that they had died out long ago (but once existed nevertheless). In general this was also true of dragons, except that people were more inclined to see them as either a monster of the distant past or of a distinct place. People might describe an odd circumstance where they could speak in the first person of having an encounter with what they believed might have been a (fill in the blank: ghost, elf, angel, saint), but they would not speak in the first person of encountering a giant or a dragon. They believed they did exist, and if someone told of an account of seeing a dragon flying around in the sky, that would have been terrifying to hear about it - and would have likely believed it, but one was not likely to meet the person who professed seeing it.

But all of this translates into a resounding yes - people did take seriously the stories of their own culture (setting aside those from the Classical world). It is unfair to term these people as naïve, however: I know of many people who believe in ghosts and angels. One may pass judgement on them, but as a folklorist, I do not. It is not my job to study the "silly beliefs and superstitions of ridiculous people," presumably those with less education. I study beliefs and the stories that embrace those beliefs, but I do not judge those beliefs, if only because I don't know.

We also should not assume that only the lower classes and poorly educated believed in these things. Some of our best documents from the early modern period were crafted by well educated people who put forward the idea that the fairies were very real.

As a follow-up question - are what we think of as a dragon or a troll (or fairy or elf) the same thing as what a classical-era or early-medieval European think of them?

I know there's been a bit of research linking more recent UFO encounters to older fairy encounters - most building on work from Jacques Vallee in Passport to Magonia. I'm just curious if the categories of being would even be the same in a pre-Industrial world.