This term was first used by the late Ming and early Qing drama theorist Li Yu (1611-1680) in his Occasional Notes with Leisure Motions. It means that in dramatic creation, one should maintain a good balance between fiction and non-fiction in characterization and plot development. According to Li, material for dramatic creation could be ancient or current, could be based on what one heard from others or what actually happened. A piece of dramatic creation was just like a fable. As long as it had a good message to convey, whether its plot was real or not did not matter much. Nonetheless, a writer of legendary drama should strike a balance between reality and fiction, suiting characterization and plot development to people’s natural way of thinking. The effort to balance fiction and reality acknowledges the need of artistic creation, taking reason and human feelings as the criterion judging artistic reality; and it highlights the difference between artistic reality and mundane reality. This view represents a proper understanding of laws governing literary creation.

Material used for writing a legendary drama may be either old or new and can be both fictitious and based on reality. The writer selects whatever material that meets his need… A legendary drama tends to be fictitious, just like fables. If you want to urge people to be filial to their parents, you can then use the name of a filial son for the play. If a virtuous deed deserves to be told, there is no need for it to have actually happened. (Li Yu: Occasional Notes with Leisure Motions)

A writer of fiction or drama needs to strike a balance between reality and imagination. Then his writing will be engaging and unrestrained. He should give full rein to emotions and plot development in his descriptions; whether they are true or not is not really important. (Xie Zhaozhe: An Orderly Narration on Five Assorted Offerings)