1) to tell a story which is based on facts and actual events, however some facts are changed or added.
2) to embellish
3) to lie (to an extent)
Chris: Look at Benmont over there rhyming to that chick.
Keith: Yes she is a very attractive young lady; he has been trying to impress her all night.
Jason: Yea, but do you hear that story he is telling her. He just told her that he pushed the Camaro out of the snow -- that is not what happened at all, it was I that pushed the Camaro out of the snow because my arms are bigger. He just watched and played Skee-Ball on his iPad. It's ok though, I won't bust up his game.
Chris: Haha. Who needs another beer?
Keith: I do, make mine a Boiler-Maker.
Jason: Hmm, I think I am gonna switch to Chardonnay.
Jason: Excuse me for a moment, I need to take this call from my wife, she must have just woken up.