Myth blurs into legend, legend into folktale. We see this in the Legendarium. The Sil begins as high myth, becomes legend after the return of the Noldor, LotR mixes legend & folktale in its styles & subject matter. The BoLT is more earthy than the later Quenta. But we see this in ancient mythologies. Homer is 'higher' than Ovid. The Illiad & the Odyssey were taken as 'sacred' texts by the ancient Greeks, along with Hesiod & the 'Homeric Hymns'. The Metamorphoses were taken by the Romans as entertainment, yet the subject matter was the same. Norse myth has the Thrimskvida
http://en.wikipedia.org/wiki/Trymskvida at one extreme & the Voluspa
http://en.wikipedia.org/wiki/Voluspa at the other
Tolkien never decends to the level of 'crudity' we find in ancient Myths, so it is lacking to some degree, but then many modern readers would find the cruder side of the ancient tales distasteful - maybe that's why his work speaks to us.