“But,” said Lewis, “myths are lies, even though lies breathed through silver.”
“No,” said Tolkien, “they are not. ...just as speech is invention about objects and ideas, so myth is invention about truth. We have come from God, and inevitably the myths woven by us, though they contain error, will also reflect a splintered fragment of the true light, the eternal truth that is with God. Indeed only by myth-making, only by becoming a 'sub-creator' and inventing stories, can Man aspire to the state of perfection that he knew before the Fall. Our myths may be misguided, but they steer however shakily towards the true harbor, while materialistic 'progress' leads only to a yawning abyss and the Iron Crown of the power of evil.”
“You mean,” asked Lewis, “that the story of Christ is simply a true myth, a myth that works on us in the same way as the others, but a myth that really happened? In that case, I begin to understand.”
From J. R. R. Tolkien: A Biography, by Humphrey Carpenter. Map below is from Tolkien's book, The Hobbit.