Bashir: "Of all the stories you told me, which ones were true and which ones weren't?"

Garak: "My doctor, they're all true."

Bashir: "Even the lies?"

Garak: "Especially the lies."

Uh, false dichotomy. The problem is fictional stories that are propagated as truthful because they reinforce people's biases and/or advance somebody's agenda.

Never let the truth get in the way of a good yarn.

I personally take this to mean that sometimes its the overall message a story is conveying is more important than the specific details.

I don’t believe in faeries, but they are there.

Nah, "truth is often stranger than fiction"