Me thinks thy are treading closely to a "sage on stage" comment.
Given the context here of a discussion, there is simply no better place for such an anecdotal piece.
Stories are great and they have their place. But like that giant stride entrance during a shore dive, there are places where they are simply inappropriate. Encumbering a class with a litany of dive stories might make an interesting class, but it will more than likely lose the marginal student's interest and simply eat up lots of time.
This is pretty complex and hard to distill in such little space. I never said you could not tell stories to illustrate points. Such stories are valuable when appropriate, but I agree with NetDoc that they can be over done. I also never said that an instructor does not talk to the students and explain things. The idea of the "sage on the stage" as a generally poor strategy refers to the formal lecture is the primary means by which information is conveyed. It may look similar, but it is different when the "sage" helps individuals or groups come to a better understanding of a learning experience they have had as a part of a complex set of learning strategies. Standing in front of a class and helping them understand the work they have done through another process on, say, Boyle's Law, is not the same as "Today I am going to explain a concept called Boyle's Law."
Analogies, on the other hand, are very different from stories used as examples of a point, and they serve a very different purpose. An example serves to help students see exactly what they have been taught more clearly. An analogy forces students to make a comparison between two otherwise unlike situations and ask themselves how the two are the same or different.
Most learning occurs when the learner encounters a new situation and applies old knowledge to it. One of the most important aspects of what we call intelligence is the ability to do that. When so called intelligent people look at new learning, they intuitively and without realizing it ask two questions: How is this the same as something I already know? How is this different from something I already know? This sends them in an analytic direction toward that learning, and they begin to dissect the whole into understandable parts.
In contrast, people we think of as being less intelligent tend to look at new learning as an entirely new whole, and they try to take it all in at once. It is overwhelming to them, and this contributes to their failure because of another skill we associate with intelligence: optimism. The "intelligent" person, armed with a history of success, will perservere toward sucess despite hardship, but the "less intelligent" person will quit easily.
The skilled instructor sequences instructional experiences to allow a transfer of knowledge at each step. This is called a "transfer load." If the transfer load is too small, the student is merely getting repetition. If it is too great, the student is confused and cannot learn. That instructor will do things that force students to ask those two comparative questions, whether they would have done so intuitively or not. The skilled instructor makes sure the tansfer load is appropriate to the student and provides the "scaffolding" needed to make those transitions in learning. They make sure students enjoy early success. Thus, students who have grown up with a pessimistic attitude toward their own learning will not be dismayed by early failure and quit.
Back to analogies:
Research by a number of researchers has shown that instructional activities that force students to make comparisons between old learning and new learning have the greatest effect size on student learning of all strategies studied. [For more details, see Marzano, R. (2003).
What works in schools: translating research into action. Alexandria: ASCD.] Analogies are one of many ways that an instructor can make that happen, and they can be very effective instructional tools.
