There is perhaps an element of the imaginary in the Puranas. It is also possible that they contain interpolations. But who is to determine what parts are imaginary and what passages constitute the interpolations? And who is to seperate the authentic from the spurious? If each one of us removes what seems interpolatory, nothing will be left of the stories in the end. So it would be better to preserve the Puranas in the form in which they have been handed down to us notwithstanding the apparent errors and distortions.
If there are stories in the Puranas that read like fables, let them be so. Do they not bring us mental peace and take us nearer to the Lord? We go shopping and make good purchases. Are we to be happy on this score or are we to be unhappy that there was something wrong with the shop or the shopkeeper? There may be mistakes in the Puranic accounts of the earth and the heavens. After all, we can have accurate knowledge of such matters from our books on geography and astronomy. The point to remember is that the Puranas contain what geography, astronomy and history do not: the truth of the Ultimate Reality. Besides, they speak about devotion and dharma.
It is argued that Rama could not have lived hundreds of thousands of years ago, i. e., in the Treta yuga, that it is not likely that the sort of civilization described in the Ramayana would have obtained in that distant period. Similar criticisms are made about stories in the Puranas and the epics. I do not accept them. But, for the sake of arguments, let it be that Rama did not live in the Treta age. And let us also presume that all those stories that happened, according to the Puranas, in the earlier Krta yuga, did not really belong to that age let us suppose that they date back to a comparatively recent period to 7, 000 or 8, 000 years ago. But for that reason would the story of Rama or others be less valuable? And would the lessons we learn from such accounts be less meaningful?
The Puranas mention the ages in which the stories recounted in them really happened. According to critics it is not these ages alone that are wrong but also the date(s) traditionally ascribed to the Puranas themselves.
According to the sastras, Vyasa composed the Puranas 5, 000 years ago, at the begining of the age of Kali. But they must have existed before him also. In the Chandogya Upanisad Narada speaks about the subjects learned by him and they include the Puranas. From this we infer that they must have existed during the time of the Vedas and the Upanisads. Just as Vyasa divided the Vedas into a number of branches for the benefit of people of later times with their diminished capacity to learn, he also composed the Puranas, which are detailed in their treatment, with the same purpose in view.
Western-educated people think that the Puranas are not very ancient. So let them be. Devotees throng the Kandasvami temple in Madras. They feel the presence of the deity there. If they think that there is an end to their sorrows by worshipping at this shrine, what else is required of a temple? Is there any purpose in conducting an investigation into the origin of the temple, whether it had existed during the time of Arunagirinathar and whether he had sung his Tiruppagazh in it? Carrying out research into the Puranas is similarly futile. If we bear in mind that their purpose is the cleansing our mind there should be no need to harbour any doubts concerning them.
There is no bigger superstition than the belief that the results of [historical] investigations represent the absolute truth. Much of today's research is hollow, much of it faulty. However, even the view of modern research scholars that the Puranas are imaginary serves to show up the purpose for which they are intended: to demostrate that one who does good prospers, that another who does evil suffers - or is raised up by the compassionate Lord.
Somehow the Puranas are regarded as of secondary importance not only by people who claim to have a "modern" outlook, but also by those proficient in the sastras. Also pauranikas (those who have made a thorough study of the Puranas and give discourses) are regarded as inferior to those who give talks on other branches of learning. However, scholars who have earned the title of "Mahamahopadhyaya" like Yajnasvami Sastri and Kabe Ramacandracar have given puranic discourses. Today Srivatsa Somadevasarma is devoting himself fully to the printing of all the Puranas in Tamil (eventhough in an abridged form).
For a general background, please see here