A story is a coping strategy to deal with the fact that we'd like to remember the past but there's just too darn much of it. Stories, among all their other myriad attractions, are ways of representing lived experience succinctly.
Memory is troublesome because forgetting is (by far!) the default. Drive the same streets for decades and you still won't be able to visualize all the details in your mind. For directions, we use landmarks. The parts of a journey we need to remember are the points of transition. It is just this same way, I believe, with story-shaped methods of remembering the past.
If the prohibitive volume of experience & knowledge is the predominant problem for human remembering, then the key challenge for intentional memorization must be efficiency. That being aside from involuntary memorization or the accidentally traumatic or the socially imposed set of important remembrances. The limitations of human capacity are beset by the incidental memorability of facts, thoughts, images, emotions, occurrences and stories we've encountered already. Thus, for any deliberate construction of new memories about lived experience, efficiency must be a primary need.
Life, of course, isn't lived as a story. At least, not until we remember it in retrospect.
There are many reasons we prefer to tell stories, but the mnemonic advantage of story, in general, should be considered axiomatic. Efficiency enables memory, and stories are immanently efficient. Narratologist Gerard Genette said "in a certain way, Homer's Odyssey is only a rhetorical amplification of the statement, 'Ulysses comes home to Ithaca'." Mieke Bal defines "Fabula" (an essential term within many streams of Narratology) as "a memorial trace of a story that remains with a reader". In anyone's definition, the vast bulk of all non-fiction stories reduce actual experience to a smaller set of recollected events and details. Plot and conflict, like settings and characters, are every bit as literarily contrived as in fiction, but in non-fiction worthy of the designation they are never contrived from whole cloth. Although exceptions exist - an extended narration of the heightened awareness of a moment, thoughts which take longer to explain than to conceive - the general experience of human history has been that stories reduce a great many experiences into a few key events and their meaningful ramifications. However you slice it, the efficiency of story is an aide to autobiographical memory. There may be parallels also between intentional memory and the incidentally memorable.
I suspect some aspects of human storytelling may have developed precisely because of human limitations in memory.
I hope to expand this hypothesis and explore its possible value in upcoming blog posts.