why are stories called romances

I think you are referring to Medieval romance literature, a style of heroic prose and verse narrative current in Europe from the Middle Ages to the Renaissance.

You might also be referring to the Romantic Poets,

Many scholars say that the Romantic period began with the publication of "Lyrical Ballads" by William Wordsworth and Samuel Coleridge in 1798. The volume contained some of the best-known works from these two poets including Coleridge's "The Rime of the Ancient Mariner" and Wordsworth's "Lines Written a Few Miles from Tintern Abbey."