folks, this the paragraph I'm trying to understand:
"It’s the day of the Annual Woodland Valley Storytelling Festival, and this year, it’s being held in… you guessed it… the Big Blue House. Everybody from the valley’s coming over for a day of yarn spinning. And as they all find out, there are a lot of different ways to tell a story."
is yarn spinning simply yarn spinning and not another way to say "story telling"
In this case, it doesn't sound as though there will be any actual yarn being spun, just stories. Yes, as you have gathered from context, a "yarn" is a good story, and "to spin a yarn" means to tell one.
From the Online Etymology Dictionary: "The phrase to spin a yarn "to tell a story" is first attested 1812, from a sailors' expression, on notion of telling stories while engaged in sedentary work like yarn-twisting."