How much reality?

I am reading a long interview with Christa Wolff, a German author, formerly East-Germany (GDR). I am intrigued that in speaking about her latest book Stadt der Engel oder The Overcoat of Dr. Freud that she wanted to create a texture that was as close of possible to the stark reality of her Stasi past. Her frustration is the split between how we think and how we write: three thoughts interwoven, circling, flashing, stopping, noisy in our head and on the other hand being unhappy because writing is a linear activity... Is it? Maybe it is different for poetry, maybe I am influenced by the translation process of poetry which to me isn't linear at all. And then I wonder is sincerity and being as close as possible to the truth the same? Is emotionality the truth? I must agree with Mary McCarthy in her essay On Madame Bovary that probably Flaubert's friends "suggested her case to him as the subject for a novel, on the writing course principle of 'Write about what you know' " So what is the difference between a chronicle, a good piece of historical writing and a novel? What is happening to imagination in novels? Is the truth and nothing but the truth possible in autobiographical writing? Should it matter? Or is the importance an interesting, well written book, whether true or not? In other words do novels have to stand the test of truth commissions?