Ancient people got confused with fossils. For example, the cyclopes myth may have its origin in the fossils of Pleistocene dwarf elephants, because they look like a giant skull of a one eyed human, if you use your imagination.

https://en.m.wikipedia.org/wiki/Cyclopes

(see Possible origins section)

There is a very good book called "The First Fossil Hunters" that deals with discovery and interpretation of fossils in antiquity. Bones of large prehistoric mammals were frequently dug up and displayed as "giants." Some of the more esoteric animals in Herodotus are probably actually references to fossilized dinosaurs.

https://www.amazon.com/First-Fossil-Hunters-Dinosaurs-Mammot...

Also, ancient people would hike up to the top of a hill or mountain and see fossils of sea shells and fish and would accurately conclude that this ground used to be under water. Of course they would have naturally assumed there must have been a helluva flood at one time. Which is perhaps why there are flood myths in so many different cultures.

I strongly believe the flood myths we find from cultures around the globe is due to the end of the last ice-age and the influx of polar icecap meltwater[0] into the oceans during the incredible global climate catastrophe around that time[1]

[0] https://en.wikipedia.org/wiki/Meltwater_pulse_1A [1] https://en.wikipedia.org/wiki/Younger_Dryas

I think this idea definitely deserves a historical fiction book.

Aronofsky’s “Noah” has some pretty interesting depictions of what I believe were fallen angel stone giants intended to represent the Nephilim. I also found it interesting how the depraved human society God sent the floods to destroy was depicted as an industrialized society harvesting some sort of strange resource that was destroying the planet.

Not quite the same but The Inheritors by William Golding explores the coexistence of the two groups.

So does Robert J. Sawyer's "Neanderthal Parallax" series: https://www.goodreads.com/series/40828-neanderthal-parallax

Here's one more https://en.wikipedia.org/wiki/Dance_of_the_Tiger

"they later inhabited Canaan at the time of the Israelite conquest of Canaan." That would better describe nordic indo europeans than neanderthals, timing wise

Eaters of the Dead by Michael Chrichton has Neanderthals as the monsters Beowulf fights. Cool movie as well.

I wonder where else the Neanderthals might be mentioned in old stories.

If by stories you mean written, surely nowhere. There are some 40,000 years between the last Neanderthals and the invention of writing.

Though I’m not even a history hobbyist, it seems incredibly unlikely for those stories to be passed down orally for that long in any distinct manner.

The Aborigines in one area tell a story of a hill in their lands that one day spouted fire which created the land they live on. It’s actually an extinct volcano that extended the coastline 37,000 years ago creating their wetland habitat. Details linked.

https://www.earthdate.org/the-oldest-story-ever-told

We know cave paintings were remarkably consistent across extremely wide geographic areas for more than 15,000 years. It's not inconceivable pre-literate cultures could maintain the fundamentals of an oral tradition on these timescales.

I think most of the stories got reset during the ice age. We may not find may reference.

but Neanderthals were short and stupid.

I think the Nephilim, given the way they were described as tall "sons of God" who were "heros" and "warriors of renown" were an African people

Some think they are stupid but we know they had 1700 cubic centimeters of brain volume compared to 1200 cubic centimeters for an anatomically modern human.

It is possible that they were not that stupid and they were simply outbred by humans.

They were certainly very conservative in their stone tool design. Mousterien tools change little over more than 100 000 years of their existence.

They also lived in an ice covered world full of lethal megafauna instead of a post ice age world with fertile lands ready for agriculture and smaller animals.

True, but was such a state of things an obstacle or an incentive for innovation?

After all, with better tools and weapons lethal megafauna may be slightly less lethal for you.

There are various human groups that settled areas and didn’t make much technological progress for a long time, thousands to tens of thousands of years.