What do we mean when we say it today?
Nowadays, we use this phrase to say there's an interesting/long/crazy/unbelievable story to tell. Your friend might say, "Hey, how did you meet Lady Gaga?" and you reply, "Thereby hangs a tale." Translation: it's a totally crazy story that you'll hardly believe even when I tell it to you.
It's also the title of a Jeffrey Archer book and a Chet and Bernie mystery by Spencer Quinn. We're betting you've come across this phrase in everyday life. People throw this one out all the time to say there's a lot to tell (or not tell) about an object or incident. We even hear people saying this to get out of telling a story. Kinda similar to Grumio, only they don't accidently tell it in the process.