A little of both. Every experience is different and a lot of what I write is grounded in things I know or have experienced, but some of it is about changing things and creating the fantasy around it.
Hmmm…a bit of a loaded question, but I will give it a try.
The fact that a person can organize their thoughts to create a story at all speaks to an intelligent mind.
The idea that they can write in a way that can not only engage a reader, but also amuse, bring them to tears or even excite them that definitely demonstrates intelligence.