Dramatization

A word that has become very loaded, especially when it comes to television.

Its basic definition is, essentially, "staging of a story." It isn't just creating a story but expressing it, presenting it to the audience in an art form. Even if the story is true it has to be presented like a fictional account, such as depicting the exact words spoken in a conversation where no one possess a transcript of it.
When a story is Ripped from the Headlines or Inspired By a true story, this word means "we changed a bunch of stuff to make it less boring." Or else it's something whose publication in gory detail can be tolerated only if the creators can say The Tasteless But True Story. Or both.
As a commercial disclaimer, it means, "We used special effects to make this commercial, so don't expect our product to actually do this stuff." Applied to a lot of truck ads. (See Do Not Attempt). Also applied to "endorsements" by "ordinary people", who are in fact actors reading scripts. (This latter meaning has recently been subverted by: a series of ads for satellite TV in which famous actors do readings of ordinary people's letters to the satellite TV company; a series of car-insurance commercials featuring an actual celebrity seated with an actual customer, attempting to make their stories more gripping, usually by poking fun of their own image.)
Accompanies less-than-accurate reenactments on "true-crime" shows like America's Most Wanted.

Examples of Dramatization include:

Anime and Manga

Gundam Sousei is what happens when you tell the story of how Gundam was conceived and turn it Up to Eleven.
Macross: Do You Remember Love? movie is the dramatization of the original Super Dimension Fortress Macross TV-series. It was later retconned to be an in-universe movie.

300 is basically a Dramatization Inspired By the conflict it represents, and makes no secret of this. As someone aptly summed-up, "This isn't the way it happened. This is much cooler."
The Hunt for Red October is based on the the defection in 1961 of a Soviet submarine under the command of Jonas Pleksys (1935-1993) a Lithuanian whose childhood was marred by World War II and the later deportation of his parents to Siberia. A graduate of the elite Leningrad Naval Academy, his defection to the West at the age of 26 while in command of a sub undergoing its first sea trials inspired the character of Marko Ramius in Tom Clancy’s famous book, whose story is set in a later period in the Cold War with more advanced vessels and technology.
Twelve O'Clock High includes what The Other Wiki calls "a thinly disguised version of the notorious Black Thursday strike against Schweinfurt" during World War II.

See The Hunt for Red October in Film.
In Cold Blood by Truman Capote is the dramatisation of a real life murder.
Kill Time or Die Trying by Neil T Stacey and Christopher Dean is a dramatisation of their time at the University of the Witwatersrand.

The Investigation Discovery channel lives on this trope. Sometimes it gets borderline pornographic, since they often recreate scenes of people having torrid affairs in extreme detail.