IWSG: Truth or Dare?

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This is my JuneĀ  post for the Insecure Writer’s Support Group, where on the first Wednesday of every month, like-minded writers come together and share advice, good news, and more.
This month, I have a question: What constitutes good storytelling? Is it more important to be factual or is it more important to have a really great narrative?
In the context of fantasy writing in particular, I am thinking of some of my favorite authors like McCaffery and Lackey, who both wrote in universes with magic systems designed with D&D like precision, where you could meaningfully turn it all into charts and numbers if you wanted to. It’s all very simple, all very clear-cut, and sometimes that bugs me – because real life isn’t always simple or clear-cut. In fact, it usually isn’t. In the real world, the good guys don’t always win in predictable ways in keeping with set formulas.
I do like stories to be unrealistic, to have beginnings, middles, and ends – despite the fact that my rational self is rebelling against this – like life doesn’t work that way! I privately can’t stand the kind of story I always seem to find myself writing where everything gets so deep and reflective and existential and is any of this even real? I’ve read Moby Dick for example, prone to existential tangents AND *all* of the research you could want on whales. (I think it’s an awesome book by the way – if you skim a few chapters here and there.)
I can think of several stories where the narrative got really strange and wacky – and how glad I am that they did. And others where I’ve thought – sheesh – couldn’t the writer have maybe cracked a book about life in the northeastern United States before writing that? I believe research and realism is important at service to the narrative, but the narrative is always the boss, but I’m having a hard time convincing my brain of this. What do you think? What makes a great story? What makes great storytelling?