The difference is THEN, if one wants to validate that story and find whether or not it is empirically valid (notice I stayed away from "truth" which is philosophical), one must go to deductive reasoning. What is the evidence, how does one analyze the evidence, and construct the multiple working hypotheses which must each be falsifiable (thus the process of "deducting" each hypothesis that are determined to be false, contrary to fact).
Constructing a narrative can come from dreams, novels, fantasies, urban legends, twice-told tales, observations in nature, rumor, or pretty much anything.
BUT, if it is important to determine the reliability, the "truth" if you will, of a claim or a narrative or a "fact," then deductive reasoning, and the scientific method for testing claims of empirical reality, are the best (some would say only) tools for testing those claims and narratives.
If one dislikes deductive reasoning or scientific methodology, because it destroys or infringes upon one's favored narrative (it ruins things), whether it is of a house being haunted, or pyramids being built by aliens, or the Chinese discovering America, that God created everything 6000 years ago, or whatever...then enjoy your favored narrative, find meaning and satisfaction in it, but do not confuse it with verifiable, consensus reality...what most folks know as "the truth."
And yes, this is coming from a fellow who CHOOSES to believe in God, and who has had personal experiences of genius loci and other nature spirits. But I do not pretend to say they are scientifically verifiable :-)