A folktale is a legend or story originating among people or folks passed down traditionally. So, for something to be a folktale, it must originate from ancestors and be passed down to each generation. They all began as stories told by mouth, not written down. Also, there is always a moral of the story or a lesson which come from impossible seeming tasks. Some tell of how creatures of earth came to be and since these people were guessing, it caused the creation of myths. Also, all characters are animals or people and things usually happen in threes. Hence, the rule of three. They sometimes talk about peoples fears and anxieties and how they overcome such fears. They tell of peoples lives and their imaginations. They don't have known creators, which is the beauty of folktales. They aren't all realistic and share sometimes of real settings, but fictional characters. They are such amazing stories and share amazing things to overcome. Folktales come from all over the world from such places like asia, india, china, etc. Some well known folktales you have probably heard of or read are "Jack and the Beanstalk", "Goldie Locks and the Three Bears", and "Chicken Little". If you haven't read these yet, you definitely should because they share such amazing morals and lessons, which I really took in as a child.
