It might not be typical. Usually, such stories are considered very private. However, if she has a really open relationship with you and she's just trying to be more communicative about certain aspects of relationships in general, it could be okay. But still, it's a bit odd.
If you're comfortable with it, you can listen with an open mind and maybe even share your own thoughts. But if it makes you uncomfortable, calmly tell her how you feel.
Perhaps she is testing the waters to see how you would react to more adventurous sexual ideas. It might also be that she has a newfound confidence in the relationship and believes that you two can have a more open conversation about sex - related topics. However, it's also possible that she doesn't realize it makes you uncomfortable if it does, so communication is key to find out her real intention.
First, stay calm. If you're comfortable with it, you can engage in a conversation about it. If not, gently let her know that it makes you uncomfortable.
It depends on the nature of your relationship. If you have a very open and adventurous relationship, you might laugh it off or even engage in a healthy discussion about sexual fantasies in general. But if it's not something you're used to, it's important to set boundaries. You could say 'I appreciate your openness, but this is a bit too much for me right now.'
One consequence could be damage to the relationship's reputation. People may view the couple differently. Also, it can make family members and friends uncomfortable.
He should first listen calmly. If he feels uncomfortable, he can gently tell his wife that this topic makes him uneasy. For example, he could say 'Honey, I don't think I'm comfortable with this kind of story.'
It depends on your relationship dynamics. If you feel a bit shy or unsure, you could just listen quietly at first and then later tell her how you feel. You might also want to make sure that this is a healthy form of communication in your relationship and that both of you are okay with this kind of sharing.