These novels like Journey to the West, Romance of the Three Kingdoms are popular even in the modern west. They and their motiffs also seem to be well known in nations like Japan as well.
As I believe literacy was a problem, how popular were these novels when they were written? When did they first gain popularity? How did they cement themselves so much that they are well known even outside China? Any insight is appreciated.
While much more can always be said on the topic, I hope a few of my previous posts might help OP's curiosity:
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In short, diffusion of the Chinese classic novels out of China in its first phase mainly owed the cultural connection of Buddhist monks and Confucian scholars via studying abroad and book trade, then it was integrated later in the rising civic culture during later Edo Period.
Then, how far it was popular originally in Yuan and Ming China? It is said that (and while I'm not so specialized in this area and period, and field of research), a predecessor of the famous RTK (Romance of the three kingdoms) like *Sanguozhi Pinghua * ( "Records of the Three Kingdoms in plain speech") had roots in the rise of storytelling and play in the Chinese urban culture since Song period. Such storytelling and play often took material from history in distant past, and heroes of the three kingdoms period was no exception to this trend. Thus, I suppose they were popular at least in cities in late Yuan and Ming China.
This recent monograph by Ota (unfortunately in Japanese) traces the historical development and popularity of Guan Yu cult and legends in late Imperial China. Apparently thanks for the historical novel like RTK, Guan Yu got popular in the world of popular cult since Ming Period, and Qing authority seemed to make use of his cult within the military expansion into central Asia as quasi-state religion as well.
The popularity of Guan Yu mausoleum (temple) in China towns across the world should also be seen in this trend.