"Storytelling" as a communication tool has been around for years and is very powerful too. For e-learning, I used to think that stories typically work to grab attention etc. A passive story running through the course? Too boring! Over a period of time, I discovered that even passive storytelling works for the following:
1. Establishing the training need: There can't be a better way to grab learners' attention, for sure. Training employees on a new system/application implemented in the organization? Tell them how it helped a certain employee with a similar profile and get them hooked.
2. Connecting various topics: Weave the magical connection by having an overarching story for the training course, and connect different topics using smaller stories derived from the same story. Apart from building connections, stories help break the monotony, build motivation, and reinforce teaching points.
3. Teaching abstract topics: A subject that is not literal or experiential (by five senses, that is) may get difficult to explain. Nothing works better than using stories and analogies from real life to transfer these concepts effectively. Need to sensitize people about avoiding debt? Tell them a story about how debt spelled doom for certain characters and see the results.