In Larry Benson’s very fine work, Art and Tradition in Sir Gawain and the Green Knight, he makes some interesting observations about the role of the poet in the Classical and Medieval world.
The classical epic poet draws his material from the oral tradition. He is not the originator of the work. He is simply passing along an older tale. There may be room for innovation and variation, but the source of the poet’s authority comes from the oral tradition.
In the Middle Ages, the poet also appeals to tradition, but this time the tradition is not oral. “The romancer, on the other hand, bases the authentification of his narrative, on the medieval respect for written authority, and he poses as merely a clerk, repeating what he has read.”
So, the medieval poet uses the convention of explicity stating that his work is based on previous books, written authority. Again, there is much innovation and variation available to the poet, but the source of authority is outside of himself, existing in a written authority.
This is what distinguishes medieval romances from later narratives—the source of authority. The medieval poet references books as his source of authority for his tale. The novelist not only does not reference previous sources of his tale, but rather exalts in his freedom from those sources, his originality. Thus the name novel.