Did the ancient Greeks genuinely believe that figures like Heracles or Achilles actually existed, as well as creatures like the medusa or hydra? Or was all of what we consider to be "Greek Mythology" considered even back then to be stories that we were supposed to get moral lessons out of and nothing more?
More can always be said on the matter, as no answer is ever 'final'; further answers are more than welcome from anyone able to contribute. For the meantime, OP, you may be interested in the following previous answers. The first two cover how the Greeks regarded Mount Olympus, and offer a view into how they thought; the third is a more general treatment of Greek belief.