These words are used in various was by different people, so no matter what definitions are imposed, one will see the terms used in wildly different ways.

The easy ones to talk about are folktales and legends because Europeans - and most people international - make a distinction between two types of narratives that happen to be reflected in these words.

A folktale is a story that was/is told as fiction. In Europe, these were usually told at night, typically in winter (when the nights were longer). Folktales were usually multi-episodic, cast in a fanciful place and/or time, and they ended happily.

Legends are narratives that were usually told to be believed. They were typically brief, sometimes with only a single episode. They usually dealt with the extraordinary and they often ended horribly. They were typically told during the day, especially when dealing with the supernatural that people feared could be summoned by the telling (you wouldn't want to talk about supernatural beings at night for fear of having them lurking about!). There were also etiological legends and historical legends that told about the origin of things or about culture heroes - George Washington chopping down a cherry tree or stories about Robin Hood. These could be told at night, because the subject did not present a danger.

"Fairy tale" is a difficult term. Folktales are often referred to as fairy tales, particularly when fairy-like entities are part of the plot. In modern times, however, "fairy tale" took on connotations that don't suit the noble folktale: when folktales were abridged and "sweetened" for publications for children, they became the type of stories that adults could dismiss: we often say "Oh, that's just a fairy tale" to dismiss something someone has said, to describe it as an account of no consequence. Because of this, I prefer to reserve "fairy tale" to describe published, diluted folktales or stories that have been invented to mimic the genre of the folktales.

"Myth" is a tougher term because it is loaded with meaning that is not always intended or appropriate. People say "oh, that's just a myth," to suggest that "ignorant, superstitious" people believe in it. It has acquired a derogatory connotation, and so I prefer to see it reserved for ancient, extinct belief systems and their narratives. Many classical myths were etiological legends, narratives about culture heroes or legends that explained the origin of things. Classical myths could also be the testimonial legends that described how their supernatural beings behaved and how one should avoid offending them or how one should seek their favor. In addition, we occasionally find full-blown folktales lumped together with compendiums of classical myth, so clearly, this was just a catch-all for the folklore of ancient peoples. When "myth" is used in a modern context to describe "American Indian myth," for example, it can be hurtful, just as it would be to describe the Christian Easter narrative as the "Resurrection Myth." That is why I prefer to reserve the term for ancient people who cannot be offended by modern connotations that are now associated with the term.

Following are the definitions for these terms that I present in my Introduction to Folklore, which I used when I taught "mythology and folklore" at the university level:

European folklorists, following the lead of the folk themselves, have long recognized two forms of oral tradition, Sagen and Märchen, legends and folktales. While there are many other forms of oral tradition, legends and folktales stand in opposition to one another, yet share a great deal. In reality, lines can blur.

Legends – or Sagen as the profession often prefers – are generally short, single-episodic stories told chiefly in the daytime. More importantly, the teller intended the listener to believe the story. Legends often have horrible ending to underscore the story’s important message. Many of them are, after all, meant to be instructive, to serve as warnings in some way. These types of stories are not necessarily long-lived. Their point is to reinforce and prove the legitimacy of a belief. Nonetheless, some legends take on a traditional character, can become multi-episodic, and migrate over considerable spans of time and space.

Folktales – or Märchen, again using the German, technical term – are longer stories with more than one episode. They are restricted, in theory at least, to evening presentation. A folktale is not to be believed, taking place in a fantastic setting. The European folktale also requires a happy ending, the cliché of “happily ever after.” Any given folktale can be told with considerable variation, but they are traditional in basic form, and folklorists have spent decades tracing the history and distribution of these stories.

A word here about the term “fairytale” is appropriate. At the end of the eighteenth century, various writers, most prominently the Grimm brothers, began publishing children’s stories based on folktales. These collections became extremely popular, particularly among the urban and increasingly literate emerging middle class as it found itself removed from the peasant soil that served as home to the stories. Fairytales often cause misunderstandings. In a culture that knows more about fairytales than Märchen, people assume that the folktale was intended for children. This is certainly not the case since the stories were often violent or sexual in ways thought inappropriate for children. Indeed, the telling of a folktale was usually delayed until the children had gone to bed. While fairytales provide the modern reader with the easiest access to the many stories that were once told internationally, one should always realize that they are removed from the primary inspiration. The original stories and their content provided serious entertainment for adults and they were part of an oral tradition, not something that was fossilized in writing.

The evolution of published fairytales had a profound effect on the popular idea of fairies, elves, trolls, and similar entities. Because fairytales became the literary domain of children, many people – including later writers – assumed the same was true of the supernatural beings. In their original context, nothing could be further from the truth. These were not cute, diminutive creatures whose sole purpose was to delight children. They were powerful, dangerous, and capable of great harm. The European peasantry feared and respected them, and their stories underscore this, conveying in uncompromising terms the code of ethics and behavior that one must employ to survive an encounter with the dangerous world of magic and power.

The definition proposed here for “fairytale” does not necessarily coincide with how people – and even some folklorists – use the term. Some scholars regard “fairytale” as appropriate for the more fantastic expressions of folktales as they were told by the folk. The reason why the term is not used in that capacity here is because the folk did not refer to these stories as fairytales and because the term implies a degree of innocence that is inappropriate; again, “fairytale” is most suitably reserved for the published children stories that gave literary expression to the adult oral fictions of the folk.

Besides the legend and the folktale, there is also the folk ballad, a specialized form of oral tradition that, like the others, incorporated a wide range of beliefs. The ballad had roots in medieval Europe, combining narrative and song. The ballad usually focused on a single incident, and it almost always emphasizes action.

Something also needs to be said here about myth. People use this term awkwardly. In a European context, myths tend to be the artificial constructs of ancient and Classical-era priests or literate people who sought to weave folk traditions into a comprehensive whole. The exercise often had political purposes, designed to provide diverse people with a single set of beliefs and stories. By reconciling similar traditions, the shared culture of these groups could be seen as more important than the differences, justifying the central rule of the king and his priests. Myth is also a way of organizing and reconciling folk traditions, which by their nature can be contradictory and highly localized. Myth tends, however, to make gods of supernatural beings, giving those powerful entities a status – for modern readers – similar to the Judeo-Christian-Islamic God, even when this comparison is not justified. Of course, it is also important to point out that myths were stories that were told – and then written down – and they were different from religion itself. Many myths were simply the shared cultural inheritance of a group of people.