In general, Aggadah is a compendium of rabbinic texts that incorporates folklore, historical anecdotes, moral exhortations, and practical advice in various spheres, from business to medicine.
[2] The majority scholarly opinion is that the Hebrew word aggadah (אַגָּדָה) and corresponding Aramaic aggadta (אֲגַדְתָּא) are variants of haggadah based on a common linguistic shift from haphalah to aphalah forms.
In this context, the widely-held view in rabbinic literature is that the Aggadah is in fact a medium for the transmission of fundamental teachings (Homiletic Sayings—מאמרים לימודיים) or for explanations of verses in the Hebrew Bible (Exegetic Sayings—מאמרים ביאוריים).
The rabbis of the Mishnaic era (c. 10 to c. 220 CE) believed that it would be dangerous to record the deeper teachings in an explicit, mishnah-like, medium.
This mode of transmission nevertheless depended on consistent rules and principles such that those "equipped with the keys" would be able to unlock their meaning; to others they would appear as non-rational or fantastic.
As regards this, Maimonides (1138–1204), in his preface to the tenth chapter of Tractate Sanhedrin (Perek Chelek), describes three possible approaches to the interpretation of the Aggadah:[7] Maimonides' approach is also widely held amongst the non-rationalistic, mystical streams of Judaism—thus, for example, Isaiah Horowitz (c. 1555-1630) holds that "none of these sometimes mind-boggling 'stories' are devoid of profound meaning; if anyone is devoid of understanding, it is the reader" (Shnei Luchos HaBris, introduction).
(Tractate Avoth, which has no gemara, deals exclusively with non-halakhic material, though it is not regarded as aggadic in that it focuses largely on character development.)
[10] Much Aggadah, often mixed with foreign elements, is found in the Apocrypha, the Pseudepigrapha, the works of Josephus and Philo, and the remaining Judæo-Hellenistic literature; but aggadic exegesis reached its highest development in the great epoch of the Mishnaic-Talmudic period, between 100 and 550 CE.
The final edition of the Mishnah, which was of such signal importance for the Halakah, is of less significance for the Aggadah, which, in form as well as in content, shows the same characteristics in both periods.