How is myth used in sacred texts, and how is this different from other understandings of myth?

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The original Greek term "mythos" simply means a story. Although any tale could be termed a myth in Greek, it eventually became used as a way of distinguishing traditional or legendary tales from ones told about contemporary events or invented by individual contemporary authors. In the "religions of the book" (Judaism, Christianity, Islam, Mormonism, etc.) the centre of the religion is a written "Scripture", narrative accounts of divine beings, and ritual in many ways replicates or adds to a textual core. In ancient religions, rituals were earlier, and myths accumulated around a ritual core. What was sacred was not the texts or myths, but the ritual acts they explained or accompanied.

In modern popular parlance, we use the term "myth" for a sacred text which we do not believe. Thus can be a confusing usage because what is termed "myth" will vary depending on the religion of the speaker -- a Christian might term the Upanishads "myths" but a Hindu might say the same of the Bible or the Book of Mormon. Thus in academic environments, we usually restrict the term myth to stories belonging to oral traditional cultures.

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