I guess, there's another set of tranformations in stories.

At least in European culture, stories lost their religious part in the modernity. Probably people stopped understanding it earlier, but they were transformed in the XIX century. For example, a knight didn't serve a lady in medieval literature -- he served the god. Some story had a knight standing on his knees in lady's sleeping room, of course, having no sex, nor kisses -- not because of "romantic" self-denial, as we would think -- but just because they were praying. They were busy saving their souls before the judgement day. In the Enlightment age, people stopped understanding this, and replaced it with purely romantic motivation.

The other stories, that villagers told their kids, were probably to scare them, about the dangerous world around. The characters were motivated purely by the need to survive, and minding their own business, no high moral goal. In XIX century, with steam locomotives and boats, people could travel to unthinkable places, and many moved to cities, so you couldn't scare kids with a witch or a werewolf living in that forest beyond that lastmost house. So, storytellers invented the adventure genre. So, instead of trying to survive, characters go far away on purpose, where they need to fight to survive. Or there are some unknown human villains, who the good character has to fight.

In late XX century, this story becomes unconvincing too. Big villains and monsters are unimaginable, so stories start breaking this pattern, often demonstratively: here's a monster, ugly and huge, the little boy is scared of him, but suddenly the monster turns out nice, and loves dancing walzer or makes sweet pancakes, and they become friends. Soviet cartoons in the 80s were 100% postmodernist, whilst what I saw of the American ones, were still like 80% modernist -- the bad guys, danger, the righteous main character.