These sorts of question are always difficult to approach because different people at the same time likely viewed these stories differently. And then when we consider people of different centuries in the ancient period, we introduce yet another avenue for variation when it comes to belief or other ways to approach mythic narratives.

Sometimes it's useful to consider a modern analogy and consider the answers in our own time. For example, the story of Noah and the Great Flood is taken by many to be an exact description of what happened. Others view it as a fictional narrative that offers an opportunity to gain insight into faith and God. Others view it as a story that is harmful to our ability to advance science in education and that ultimately may threaten our very existence as true believers use it as evidence that 'climates always change, but God will take care of things'. Each of these possibilities manifest in a single society: belief, skepticism, a wish to learn from a charming story, hostility to a myth that slows progress.

Given that we can see all those possibilities in our single moment in time, we must consider the possibilities of belief, understanding, and skepticism in the context of ancient societies. For the most part, these stories had counterparts in oral tradition: people told them for generations, and it appears that they were usually told with the intention that they should be believed. That said, every society has its skeptics, even preliterate ones.

It is difficult to get into the heads of ancient authors (although some reveal more than others). Some may have recorded these stories with devotion and faith in their veracity. Others may have recorded them understanding that while they may not be true, they provide valuable opportunities to instruct the reader about various virtues and the pitfalls of life that can defeat us. At the same time, some authors may have used the stories for entertainment and literary purposes with no faith in their veracity and little interest in 'the moral of the story'.

Given that frame, let's consider your questions:

when some Greek or Roman author was talking about the Age of Heroes, was that ancient history to them already?

For some yes; for others no. If we can generalize, I suppose we could say that the earlier the document, the more likely the author believed this was a description of their ancient history; the later the document, the more likely that the author was a skeptic of some sort.

How far back did they think the Gods were here on Earth?

I don't have an answer for this one. The understanding of preliterate people is often that 'ancient' is defined in terms of a few generations or centuries, but the idea of many thousands of years is illusive. That said, we have many authorities here who can help with this. HELP!!!

When those writers started talking about Gods like Zeus etc, did they knowingly get those stories from somewhere and did they believe them to be true or were they just knowingly writing stories of fiction for reading and lessons teaching sake?

My introduction addresses this. In general (I'm sure there are exceptions), these stories were drawn from oral tradition, and most ancient authors would have understood that the stories were being told in various forms by at least some of their contemporaries.

And then finally, you observe the following:

This part of history is so far away to me that it's hard for me to distinguish between what was reality, what was fiction and what people of those times knew was reality and fiction.

Part of the problem is using a modern point of view to understand the past. My analogy of the way we look at the story of the Great Flood is flawed because if taken to its logical extreme, we would imagine ancient societies as segregated into distinct and often hostile camps over their stories. On this point, we need to step back and shed our modern perspective. People generally viewed these stories as important to their civic unity, as stories that had intrinsic value as expressions of who they were and what they hoped to be as individuals, all regardless of veracity. These stories defined them as a community. Even the skeptics were likely to nod at the stories and acknowledge that they had an important role in binding the society together and giving everyone a moral compass with which to live life.