‘Fiction literally is not true’ means that we can not actually just literally interpret fiction like for example, we can not assume that the characters or the situation is real. It is the manifestation of a writer’s imagination which does not make use of facts as such but in many fiction narratives, the writing may be inspired from facts. The writer observes and then after molding the situation, writes a work of fiction. It can embody truth because as it is based on imagination and the writer forms a mental image based on what is happening in the real world. At times, the writers develop characters that you can not exactly relate to a single person and yet they represent the general attitudes in the society. For example in the short story ‘the necklace’, a young lady, who is a fictional character, gives a lot of importance to showing off and pretending to be wealthy. This character itself does not exist but it actually is a representation of the truth as many such people do exist.
