For example people often use the term “mythic” and “legendary” interchangeably. You could say Churchill or people could have heard Churchill described as a mythic character and mean that he was a real individual who myths grew up around. I could see someone saying that Elvis was a mythic individual and still know that he was a real person.
I find it hard to believe that if you sat someone down and was very clear about what precisely you were asking that many people would get things so wrong.
What is far more likely is that fictional characters are seen as real. It took a long conversation, to convince a very well educated person that Philip Nolan never existed.