From the start of this brilliant story, it is clear that the theme of ghosts and stories is a prominent one, especially reinforced by the title, which reminds us that this story is a legend. Although such tales do have a basis on truth, it is clear that any ghost story is embellished and exaggerated as it is passed on. The prominence of ghost stories is again reflected in the description of the setting, which is so bewitchingly beautiful that the people have more ghost stories than normal:
The whole neighbourhood abounds with local tales, haunted spots, and twilight superstitions; stars shoot and meteors glare oftener across the valley than in any other part of the country, and the nightmare, with her whole nine fold, seems to make it the favourite scene of her gambols.
This dreamy nature of the valley and the importance of ghost stories is something that the narrator reminds us of again and again. Of course, the majority of the stories are legends because of the way that they are untrue, and this is something that the narrator deliberately reminds us of:
Just sufficient time had elapsed to enable each storyteller to dress up his tale with a little becoming fiction, and, in the indistinctness of his recollection, to make himself the hero of every exploit.
Exaggeration and the way that such ghost stories are passed on is part of the story-telling culture of this valley and is recognised as being part of the fun, as long as everybody is able to keep the strict line between fact and fiction. However, the importance of these tales is precisely that Ichabod Crane is not able to preserve this fine line. His wanderings into the realm of fantasy are shown when he begins to imagine himself as being married to Katrina before he even knows her, and the truth with which he receives the legend of the headless horseman. Metaphorically, therefore, such ghost stories seem to represent the need for us to keep a very firm grasp on the difference between fact and fiction. Failing to do this will ensure that we end up like Ichabod Crane.