The concept of “mythic time” is a term used in the study of mythology to denote a time outside of history, when the Gods walked on the Earth (or elsewhere), plants and animals could speak, etc. Too often, because of the fantastic nature of FRPGs, we seem to want to bring these mythic events into “real” history in our campaign worlds. After all, in a world where the Gods do walk on the Earth, and some plants and animals do talk, what need of “mythic time”?
I think there’s still a place for mythic time even in a fantasy RPG. Such is the time when the Gods created the world and sat upon Their throne; Adam and Eve sported in Eden; a fox steals a lamb from a squabbling lion and bear; Balder the Beautiful was slain by his brother Hoenir at the instigation of Loki (or, alternatively, fought Hoenir for the hand of the fair maid Nanna; who says actions set in mythic time can’t be contradictory?); Perseus slew (the original) Medusa; Heward played his fabled organ; Thor battled the Midgard serpent while fishing with the jotun Hymir; and both Atlantis and the Isles of Woe were still above the waves.
By simply making reference to events, beings, and places without deliberately making them “fit” into the history or geography of the campaign world, you are de facto creating mythic time. By doing so, you add a meta-layer of mystery to the setting, implying without saying it outright that time and the world itself are not necessarily a constant.
So don’t be afraid to throw a little irrationality into your world’s history. Making everything fit into nice, neat timelines and precise hex-overlayed maps might satisfy our modern sense of logic and order, but juggling things up on occasion will help add and maintain a sense of legend and wonder that gives a campaign a certain spark, as well as verisimilitude, since history and legend rarely fit into history neatly.