We all exaggerate the truth from time to time, but some people take to too far. I can't count the amount of times I've used the word billion to describe the amount of times I've done some thing, I think it's around a billion. I used to just last night, "I've seen this movie a billion times lets watch something else."
Some people go far beyond exaggeration, they make up full stories that are obviously untrue, and they do it all the time, these people are pathological liars. Maybe it's a cry for attention, maybe it's a chemical imbalance in their brain. The medical profession is still unclear, although there is evidence that it is a physical issue, that pathological liars have different brain functions. These people should not be looked at as jerks, they can't help what they do, just like someone who is depressed can't help but feel bad.
Here's a link to an article that says pathological liars have brain abnormalities:
http://www.healthypages.net/newsstory.asp?newsid=5308
If the person is lying intentionally, it's to manipulate you somehow, but unless they're a poor liar, you wouldn't know they're lying to you. Treatments for pathological lying will vary depending on the severity and the root cause.
