Inevitably, we confront the problem of why people create myths, stories, and narratives. And just as inevitably, we confront the question: are they necessary? What purpose do they serve, and can we justify spending our finite resources on understanding them?
Anyone who's take a class of mine in the past will have heard my take on this, but I believe that myth, literature, and narrative are not merely vestigial and neat, like the tail fins on a '59 Caddy, but perhaps central to our evolution, and our very survival: Fiction and mimesis are part of basic evolutionary strategies that help us learn our own continuation as a species. Fiction helps create the capacity for empathy. Most mythic stories have "pro-social" values attached to them: respect, honesty, kindness, altruism.
It may be true that "mythic" thinking represents a means of negotiating and understanding the world that is non/pre-scientific. However, it's a means of creating the world as well as understanding it, insofar as each culture, nation, and individual struggles to create a coherent narrative out of the mass of conflicting data that is reality. It's never gone out of style, as far as I can tell: information becomes narratives (stories) and stories become a myth: a story that has a larger purpose- the origin of things, the creation of identities, the meaning of a taboo, ritual or custom whose origins are lost.
Mythopoeia (sometimes: mythopoesis) is a word that describes the making of myth. Often the makings of a myth are mysterious, but quite often we can watch the process of myth creation.
The Odyssey is not only a primary text of myth, but also a meditation on the process of mythopoeia: Odysseus himself is a story teller, as is Penelope, and Odysseus confronts in Book 8 the consequences of his own participation in the downfall of Troy as a story told by the aoidos. Odysseus becomes his own aoidos, and the one man he spares in Book 24 is the aoidos, who will tell the tale of the slaughter of the suitors. The Odyssey is both mythic and self-reflexive in a way that other mythic texts are not. We are accustomed to thinking of the self-reflexivity of narrative being a (post)modern preoccupation, but we can see it is at least as old as Homer. And so the need to create myth inevitably brings about the need to reflect on myth—you can't have one without the other.
Suggestions for further reading:
Lenardon and Morford, Classical Mythology (8 ed, Oxford, 2008)
Kerenyi, K. The Gods of the Ancient Greeks
Kerenyi, K. The Heroes of Ancient Greeks.