Legend, Old Story, Folklore
Long ago people used to talk about all sorts of things. Most of them weren't true. Long ago people liked to lie a lot. Now we call those things they talked about folk tales and legends.
The readings for this word are both kun'yomi readings. You learned them both already, so you should be able to read this on your own. Just watch out for the rendaku of はなし to ばなし.
Is this a Japanese folk tale?
That's like a princess in a legend.
While waiting for a bus in the bus shelter, I read a folk tale picture book for my child.