In academic jargon, "historicity" is the question of whether an event "really happened" or whether a person "really existed." The word "history" is overdetermined in ordinary conversation, which is to say that it can refer both to "what happened" and to the account of what happened. The neologism historicity is a way of bringing more precision to discussions of historical texts.
To illustrate with an example, consider the story of the Assyrian siege of Jerusalem, told in the Biblical book of Kings. The book is historical, in the sense that it provides a matter-of-fact account of certain events that took place during a war. It presents itself as objective; it is not poetry, prayer, liturgy, or any of the other myriad literary genres that can be found in the Hebrew Bible.
However, some historians doubt the historicity of the events described in Kings. They may accept the general contours of the story, but reject its claim that an angel of the Lord killed 185,000 Assyrian soldiers. Or they may reject the story altogether, preferring the Assyrian version that survives on the clay tablet known as the Taylor prism. Or they may well reject both stories, assuming that they are mythologized versions of a different event (or made up out of whole cloth and diffused between Assyrian and Israelite communities).
Historians often doubt the historicity of legendary events and figures. For instance, debate rages over whether King Arthur was a real man (and if he was, what he actually accomplished). But the distinction between "objective" history and "legend" is much, much fuzzier than you might think. All histories are to some extent self-serving, and they are all informed (consciously or unconsciously) by the biases and personal investments of the writer... and the reader.
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