1) a nautical version of an urban legend, simmular to a fairy tale. There are two differences between a Sea Story and a fairy tale:
a) a fairy tale usually begins with "Once upon a time..." where a sea story invariably in introduced with (sic) "This ain't no shit..."
b) a fairy tale ends with the words "...and they lived happily ever afterwards" whereas a sea story will always conclude "...and things have been f*cked up ever since! "
in all other respects a Sea story and a fairy tale are exactly the same.
2) any bullshit stories passed on by seafarers, longshoremen and other nautical workers; usually focusing on conditions at sea or sexual exploits, fighting and drunkenness ashore.
Lars told the green deckhand a sea story about how he jumped ship in Hong Kong and fought off the entire shore patrol with his left arm in a sling.