This encroaches on a difficult topic because it implies an evaluation of a range of religious texts that are approached with faith rather than academic scrutiny. Most people tell legends (narratives generally told to be believed) that deal with past times. These historical legends include etiological legends (narratives that describe the origin of things). These were honest attempts to describe the past, and in some sense, they are an early generation of the historical process. In that sense, the Vedas - just like the story of Noah (and the origin of the rainbow), for example - are historical texts.

Like all historical texts, these documents have been examined with academic scrutiny and they are often found to be wanting as historical documents. And yet, those who approach these documents with faith rather than academic scrutiny continue to find them as valid descriptions of the past or at least as having some "truth" embedded within the words of the text. The process of faith is very different from the historical process, however.

It is also important to point out that historical legends are often evaluated academically and are sometimes found to contain elements of truth: the Arthurian legendary cycle is history in some sense; they aren't particularly good or reliable historical texts, but there seem to be some elements of history embedded in them. Many scholars have created a field unto itself, chasing down the "real" Arthur and the "real" Camelot. Most of the Arthurian sources evaporate under the harsh light of historical evaluation, but enough survives that those who seek the core element are satisfied. This isn't always the case with historical/etiological legends: often there is no "fact" underlying the legend: the idea that there is always an element of truth beneath every legend is, in itself, an aspect of folk belief that is not entirely true. But that doesn't exclude these narratives as serving as the first attempt to describe and understand the past.

We can look at Gibbons, The Rise and Fall of the Roman Empire (1776) as both a history (a secondary source) about ancient Roman, and as a primary source that can be used to consider eighteenth-century culture and point of view. In the same way, we can look at the Vedas at an attempt to document and understand an ancient past - as a first attempt at the historical process - and as a primary source that describes religion, faith, and the society during the time when the Vedas took shape.

We would not look at ancient mythologies as particularly reliable descriptions of the past, but they were clearly honest attempts to achieve just that.

Like for example religious figures. What separates fact and fiction.

Multiple sources providing the same bits of information. The fewer sources, the more careful we need to be with what we put forward as fact. That's why archeology in all its forms is such an important component of ancient history. We have fewer written sources surviving so it's not always easy to distinguish fact from fiction. Historians do keep in mind the frame of mind of the respective authors when analyzing sources, it's their professional duty to heed potential biases.

Whenever we analyze a source, we have to keep in mind why this specific source was written and by whom. This can tell us something about the probable factuality of the source in question. When a source was written due to practical reasons, such as a peace agreement, it's often far more likely to be factual. It's a bit more difficult to determine factuality when there are other motivations at play. Regarding written sources stemming from ancient history, many authors were either a part of the elite or being guided by the elite and their written product will often reflect that. So we always have to keep in mind the potential bias and the frame of mind of the author.

This doesn't mean that sources where we can't determine the factuality of their information are useless. We may not be able to accurately gauge the factuality of certain written sources or oral history, but they can still be extremely valuable to historians. They will often reflect the worldview of the society and timeframe in question and their more mundane pieces of information are often grounded in reality. Most importantly, they paint a certain picture which had value to both the author and his audience. This picture should also be valuable to historians when studying cultural history. That's why the last few decades cultural historians have been far less occupied with historical factuality than they used to be.

Regardless of all that, if you are concerned with factuality, you would ideally want multiple sources providing the same pieces of information. Preferably backed up by archeological information. When multiple written sources describe the same event from different perspectives and written for different reasons all while being backed up by archeological evidence, we can make a solid argument for the factuality of said event. When historians have to base their research on a very limited amount of sources, the factuality is really a matter of how the historian analyzed his sources but it will most likely be up for debate. No historian worth his salt would dogmatically defend the factuality of an event when his research is based on a very select few sources.

I think the answer from /u/itsallfolklore is spot on, and (I believe) adequately covers the Ramayana, Mahabharatha and the Vedas.

I'd like to provide an example that relates to the Puranas. Not many people realize that the famous Mauryan emperor Ashoka was virtually unknown (as a confirmed historical entity) till early in the 20th Century. A study of how that changed is briefly mentioned in R. Thapar's History of Early India:

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Until about a hundred years ago in India, Ashoka was merely one of the many kings mentioned in the Mauryan dynastic list included in the Puranas. Elsewhere in the Buddhist tradition he was referred to as a chakravartin/cakkavatti, a universal monarch, but this tradition had become extinct in India after the decline of Buddhism. However, in 1837, James Prinsep deciphered an inscription written in the earliest Indian script since the Harappan, brahmi. There were many inscriptions in which the King referred to himself as Devanampiya Piyadassi (the beloved of the gods, Piyadassi).

The name did not tally with any mentioned in the dynastic lists, although it was mentioned in the Buddhist chronicles of Sri Lanka. Slowly the clues were put together but the final confirmation came in 1915, with the discovery of yet another version of the edicts in which the King calls himself Devanampiya Ashoka.

Now the Puranas are the closest to a historical tradition in ancient India, but are not accepted as history in the modern sense. Why? Thapar addresses that as well:

Such texts are not histories in any modern sense, but are attempts to capture the past in particular forms and to use it to legitimize the claims of the present. The narratives are set in linear time. Their writing involves the patron ordering the history, the authors formulating it, and an audience whom they seek to address and who acquiesced in the presentation. The forms are not disjointed, and they attempt to borrow from and adapt what has gone before. The itihasa-purana tradition presents a narrative of events, their explanation and an attempt at summation. These are not acceptable to modern notions of analyses and arriving at historical generalizations, but they provide insights into how the past was viewed at various points of time many centuries ago.

So the references to Ashoka from the Puranas and the Buddhist chronicles were put together with archaeological evidence that could then be tied back to a whole additional set of historical timelines to confirm the "rediscovery".

A good read on the Ashoka bit would be, "Ashoka: The Search for India's Lost Emperor" by Charles Allen

Aborigines have a story describing the coastline and islands along the great barrier reef as it was 10,000 years ago. It has been confirmed that 10,000+ years ago there were islands that were swallowed by the rising sea levels and that the original coastline matched the one in the story. Meaning that this myth/story encoded highly detailed information for 10,000 thousand plus years.

There's a similar situation in southern India where they found a sunken city that dates back at least 5000 years ago.

Its also worth mentioning that throughout southeast Asia and Indonesia, there are legends of tiny hairy men that would sneak into the village and steal misbehaving children. This story is used as a "boogeyman" of sorts. Then archeologists found homo floresiensis or those "hobbit humans". There is hard evidence putting these guys as alive at 30,000-50,000 years ago and sediment suggesting as little as 12,000 years ago.

The point that I'm trying to make with these examples is that ancient human societies didn't have the fundamental scientific knowledge to explain their experiences such we can understand directly, so they often codify information into stories, or as we call them today, myths, which get incrementally changed over the centuries. A man becomes a king. A king becomes a god, etc.. We can see this clearly in the ancient Greek myth of a sea monster named Charybdis who would drink the ocean and suck ships down to the bottom of the sea. It is now known that Charybdis is how the Greeks made sense of a giant whirlpool in the Straits of Messina.

We also have to look at the cultural context in which these myths arose. For example, both the ancient Hawaiians and the Greeks had a manifestation of a volcano god. However, Each culture's god had different traits and characteristics according to their culture, so if they both somehow saw the same hypothetical eruption, it's likely that they would have wildly differents stories to explain what happened.

In the case of your father, while its very unlikely that ancient humans had flying machines, maybe it is possible they had some type of weaponized kites (kites date back to 9000BC) and the story changed and became more fantastical over time. We're likely to never know the truth. However it's not really helpful to speculate on the specifics without evidence, because speculation gets us no closer to the truth.

As much as we would like to hand-wave the accounts of ancient people away, we have to remember, that they are no different from us. And while they might not have had the scientific understanding to explain what they were seeing/experiencing, they were still able to pass down that information encoded in culturally relevant myths stories and legends, and it is our job to interpret those stories and mine them for scientific data.

But often times there is no underlying nugget of scientific truth to be found and more often than not, stories are just stories.