A relevant passage from Joseph Campbell’s essay on “The Fairy Tale” (from The Flight of the Wild Gander, 8 – though the essay title is linked to an inexpensive, stand-alone Esingle available for download):
The most ancient written records and the most primitive tribal circles attest alike to man’s hunger for the good story. And every kind of thing has served. Myths and legends of an earlier period, now discredited or no longer understood, their former power broken (yet still potent to charm), have supplied much of the raw material for what now passes simply as animal tale, fairy tale, and heroic or romantic adventure. The giants and gnomes of the Germans, the ‘little people’ of the Irish, the dragons, knights, and ladies of Arthurian Romance were once the gods and demons of the Green Isle and the European continent. Similarly, the divinities of the primitive Arabians appear as Jinn in the story-world of Islam. Tales of such origin are regarded with differing degrees of seriousness by the various people who recount them; and they can be received by the sundry members of the audience, severally, with superstitious awe, nostalgia for the days of belief, ironic amusement, or simple delight in the marvels of imagination and intricacies of plot. But no matter what the atmosphere of belief, the stories, in so far as they now are ‘tales,’ are composed primarily for amusement. They are reshaped in terms of dramatic contrast, narrative suspense, repetition, and resolution.”
Similarly, several Celtic scholars, including Heinrich Zimmer Sr. (father of Campbell’s friend and mentor, Indologist Heinrich Zimmer, Jr.), and Campbell’s advisor at Columbia, Roger Sherman Loomis, in his The Grail: From Celtic Myth to Christian Symbol, have made the case that Arthurian lore is a reworking of Celtic myths, with the knights in the tales of the Round Table in the role of the gods in the Celtic pantheon.
No surprise the observations in the Smithsonian article you share ring true for me.