I reported "history" as being acceptable. It seems like this could also mean something like "He explained the history (of the castle)." If someone has a more accurate translation of that, please let me know.
I believe you are correct;
Historien can be "The history" (i.e. through time) and it can be "The story" (i.e. someone's recount of events or possible a fictitious tale).
In this case you couldn't tell which is meant from the Danish "Han forklarede historien".