Lore can be seen as the back story. It might include details about the origins of a place, the past of characters, or the hidden histories that shape the current situation in a story or game.
In a 'naruto raised by khajiit' fanfiction, Naruto might have a different appearance. Since Khajiit have their own distinct look, Naruto could perhaps have some feline features. His fighting style could also be a blend of ninja techniques and Khajiit combat moves. And his relationships with other characters would change. For example, his bond with Sasuke might be different as he would view things from a Khajiit - influenced perspective.
In this fanfiction's plot, Naruto's growth would be shaped by Khajiit traditions. He could be part of a Khajiit clan that is at war with another group. Naruto would use his ninja skills to help his adopted clan. But as he does this, he starts to draw the attention of the ninja world. This could lead to a conflict where the ninja world wants him to return and use his skills for them, while Naruto feels loyalty to the Khajiit who raised him.
The Lore TV show is indeed fictionalized. It takes elements from various sources and weaves them into fictional narratives that may or may not have real-world inspirations, but are not based on actual events.
One idea could be a Khajiit and a Human teaming up on an adventure to find a lost magical artifact. Their different cultures and abilities would add interesting dynamics.
Fictional lore is basically the background story and world-building in a fictional setting. It's made up of details like history, culture, and rules. For example, in the Lord of the Rings, the lore includes the history of Middle-earth and the different races and their powers.