Can you explain the difference between knowing something and having experience with it? Is there any overlap between these concepts in psychology or human perception?

That is an easy question, if you don’t have experience with something, you don’t know it, you only have a story about it.

People are good at creating stories, but they are no match for experience.

IMO, knowing and stories come from two very different workings of the brain. Experience tends to work without words, and story is all words and is heavily influenced by flashes of memories associated with said story, along with subconscious, collective conscious and the whole nine yards of influences that have evolved to distort the human story, right down to microbes.