इतिहास (>> history)
इतिहास means "Thus it happened" as witnessed and experienced in first person, not simply narrating what happened around or to someone else.
In Vedic model of the Universe there is no such thing as something being only in the Past, it can be relived again, or a Future can be manifested, right now in this dimension, in this current timezone through the power of Yoga.
The Ramayana is Itihas because we can relive the Ramayana, and so too the Mahabharatha, by understanding that we are in the middle of a play ourselves, who are the other characters and who we are in this game. We can even choose to become a Rama-avatar, or Krishna-avatar, or any of the lesser roles if a full blown Avatar is too much work at this moment.
When, as a Yogi, we relive the felt experience of an Itihas, then we can confidently say that we have recreated that energy right now. "Reliving the felt experience" is not mere intellectualization, it is about actually working with the Prana shakthi of these characters and absorbing it in every cell of our being. Through that process we actually affect the Universe itself. Because we all come from the same Source we are all quantum-entangled at all levels, so what changes us changes the Universe! This last CRUCIAL point will bear oft repetition.
So when you hear the Ramayana, from a storyteller telling the tale with conviction born from relived Yogic experience, then you feel like the storyteller has actually internalized the entire story and all the Rakshasas in their tale have been de-energized, i.e. detached from their Pranic field. Hence this is now an Itihas, i.e. Thus it Happened - and the story teller is a witness to the whole Ramayana which has been playing out in their energy field since their birth. Got it thus far?
The word History stems from His-story, since we usually get stories of conquering Kings written by men in their employ, in Sanskrit such a technique called प्रशस्ति. First of course this begs the question of Her-story - where is the woman's perspective in all this, that is not rooted in imported Feminist ideology? And where is the perspective of the subjugated masses, that is not rooted in imported Sub-altern or Race studies? Thus, History is used as a tool for propaganda, for mass control. And the goal of Itihas is to deprogram false imported narratives.
Itihas on the other hand seeks to inform us as individuals how to transform ourselves. Of course, we go to endless lectures and come back just a bit dazed and the feeling exponentially decays until we revert to old patterns. Unless you look at this from a Yoga perspective Itihas then deteriorates into mere History.
There is also the reason why we do Ramayana first before we do Mahabharatha, not just because the latter is so bloody and complex, it is because the yoga techniques for destroying Rakshasas are much simpler than that of destroying Asuras. That's another topic.