The ancient and medieval writers who claim to have travelled the farthest- Herodotus, Marco Polo, Ibn Battua- have not convinced all their readers. Herodotus goes to great trouble to cite different views on controversial questions, give verifiable evidence to support his opinions, and remind his audience that knowing about the past requires deciding between contradictory and self-interested sources, but he also says that Upper Egypt is only narrow for a few days’ sail upriver after which it widens out like the Delta, gives detailed accounts of bedchamber conversations between Xerxes and Amestris, and says that flax is only worked by the Colchians of the South Caucasus and the Egyptians (2.105). One of Herodotus’ most influential and radical critics was the late Detlev Fehling. Fehling’s polemical work attracted a lot of passionate responses, and I would recommend that people read it rather than let someone else tell them what to think about it. However, I think that the following passage from one of his later articles is a good statement of the problem:
Any discussion of Herodotus’ methods will necessarily have to begin with a basic problem, which has been seen clearly by all serious scholars for more than a century. … There are no direct autobiographical statements in Herodotus (except that he calls himself a citizen of Halicarnassus, a small town on the coast of Asia Minor, but that counts as part of his name). But there are distributed over his work quite a number of passages where he says that he is reporting what is said in diverse places: ‘The Egyptians say …’, ‘the Spartans say …’ etc. There is also a smaller number of passages which, if what Herodotus states is correct, unequivocally imply his presence at the place he is talking about: ‘I heard from …, I asked …, I saw …, they told me …’, and in one exceptional case even: ‘I went to Tyros in order to ascertain …’ (ii.44.1). I do not count these as autobiographical, because they are clearly not meant to tell about Herodotus himself, but are closely bound up with the information he is presenting. Now the problem with these remarks– and I repeat: a problem recognized by everybody- is that much of what Herodotus tells us precisely in these places cannot be taken at face value, mainly for two or three reasons. [Fehling gives them] … We should not treat Herodotus as if he awoke one morning and said to himself: ‘I have a splendid idea how to make my name famous for many a century: let me be the first historian. Of course, this puts me under the moral obligation to behave like a conscientious historian, but, being an honest man, I should be able to live up to that.’ It has often been pointed out that the nearest thing to Herodotus’ enterprise existing in Greek literature before his time were the Homeric epics. The Greeks used to believe that the war which was the subject of these epics was, in principle, historical, and yet no Greek could or did overlook the fact that they consisted for the most part of pure fiction. Such considerations should help us to solve the dilemma in which Herodotean scholars always found themselves enmeshed. They believed that they had only the choice between Herodotus the truthful scholar and Herodotus the liar and impostor. They simply thought that between these two tertium non datur. Given this, it is understandable that the second possibility never had many friends. Herodotus so obviously makes the impression of a morally responsible and serious personality that nobody felt happy about catching him in a lie. Rather scholars would feel that it was not decent to do so, and so many of them preferred to close their eyes firmly in front of obvious observations.
Detlev Fehling, “The Art of Herodotus and the Margins of the World” in Z.R.W.M. Martels (ed.), Travel Fact and Travel Fiction: Studies on Fiction, Literary Tradition, Scholarly Discovery and Observation in Travel Writing (Leiden: Brill, 1994) pp. 1-15, the quotes come from pages 1, 2, and 7. You can find the article on Google Books.
You could say many things about this passage, but I think that Fehling has struck upon the key reason why few others accept his ideas completely. Herodotus sounds like a careful investigator with a keen interest in epistemology and encouraging his readers to think critically about what they are hearing. It is hard to believe that he lied, or that when he said ‘I asked them and they said …’ he did not mean that he, himself, talked to his sources. Many of his stories resonate with Near Eastern texts which are otherwise unknown in the classical tradition. At the same, it is obvious that he saw the world, its laws, and his duties as a storyteller differently than anyone does today. In his worldview, big things tend to become small and small things big not because of entropy or imperial overstretch but because such cycles are part of the world, and the Nile in Libya and the Danube in Europe are not just two big rivers but balanced parts of the earth whose forms and functions correspond in a way out of James George Frazer’s work on magic not a textbook on geology and the water cycle. The same man who carefully undermined his readers’ expectations and the messages which they would want to draw from his words also wrote that only the Colchians and the Egyptians work linen (2.105) in a world where linen had been grown, spun, and woven everywhere for thousands of years (Nosch, “Linen Textiles and Flax in Classical Greece: Provenance and Trade”).
Just what Herodotus felt was acceptable to do in turning other people’s stories into his own is a hard problem. It is very hard to believe that he systematically invented sources, but it is also hard to believe that he saw and heard everything which he says he saw without at least massaging them to fit his own needs and his audience’s expectations.
Edit 2018-10-09: Clarified what Herodotus says about linen in Egypt and Colchis and added a link to Nosch’s article