I am totally fascinated with this concept. I read Jung and Christianity by Clift a few years ago, and tried to read the Origin and History of Consciousness by Neumann, but couldn't quite get through all of it.
In the Portable Jung by Joseph Campbell, he stated that mythology has four functions:
1-to elicit and support a sense of awe before the mystery of being. He used the word numinous - on the primitive level it is demonic dread, on the highest level it is mystical rapture. Myths provide access to power, emotional, psychological, and even physical reserves of power that are not otherwise available.
2- to provide an explanation and image for the universe and how it came to be. The description of the world, however, has to correspond to the actual experience, knowledge, and mentality of the culture involved. This explanatory function of myth is what has given myth its bad name. Today we turn to science for explanations, rather than to the old folk stories of our culture. For most of us, science functions like myth in that we have no personal experience of the matter. We put our trust in the scientific view given us by or culture and enshrined in its myths.
3-is a sociological one. Myths help to relate an individual to the group. They make individuals feel that they belong. They know who they are - "sons of the covenant," "children of the sun goddess," and so on. It is in the stories of their cultures that individuals in primitive societies found their orientation and direction - how they were to live.
4-to help the individual learn something about him or herself. This is the psychological function of mythology. Myths traditionally have something to say about the proper course for one's inner develoopment. Perhaps it is this function (and some of the third) which contemporary society finds missing.
Myth can be said to be part of the language of religion.
To know another's myth is to know his innermost desires, goals, and the basis for his choices.