Maybe she is lying to herself as well and believing the things more than your family does, because obviously you know it isn't true. It's hard for people who do not have this issue to imagine it being possible-why can't she just stop, right?
Well, most likely her lies are for emotional reasons, or more of an exaggerated version of the truth because she wants to communicate something to you in a way that you understand her pain. Now this is a little bit different than when someone lies for "outside" reasons.

For example, if a child lies about breaking a lamp in order to avoid getting in trouble, the story could keep growing, but his mother will either believe him and he will not be in trouble, or he will be in trouble. Its easier to be aware of physical things, and once he gets what he wants, he is satisfied.

But emotional needs are constant. We are born with them. Usually the mother of a newborn meets those needs properly and they don't need to spend the rest of thier lives seeking to get that need met. The truth is, people in the world understand certain things and the feelings that go along with them than others. That's why TV commercials use children in their ads because people have more of an emotional connection to the child than they might to a 50 year adult, even though the needs and feelings, and suffering, may be exactly the same. Therefore the advertisement gets its message,something is wrng..across better with the child.

So what am I trying to say? Your aunt is most likely trying to express her pain, feelings or past to you in a way she thinks you would understand. And because this need and desire is so strong, she has lost touch with the outside. If you were starving, would you be able to focus on much else than food?

As I said before, emotional needs.are there at birth. Children shouldn't have to do anything to get love, they should naturally get it because they exist. I can't just go up to people and " I'm 23 and I have the emotional needs of a 3 year old" and get those met. Most likely I'll be told I should not feel this way, but that doesn't erase the need. The same as your aunt probably cant tell people, "I have the same emotional needs as x and y" without offending someone. So she has allowed herself to become x and y.

I don't know your aunt, but I am 99% sure she never intended on hurting you or anyone else. Understandably she probably has hurt and lost a lot of people in her life. As her family, you seem to have stayed, which is more than I can say for my own mother. Please know that it is possible to love and support your aunt without trusting her. You don't need to go along with her stories and you can always doubt what she says.

But that doesn't mean you need to abandon her. If you do, it isn't going to eliminate her need to lie, and she is most likely going to seek her needs to be met somewhere else, and affect someone else more who doesnt know her like you do, her family.

If you let her know that you love, support and understand her unconditionally-something every human deserves from somewhere I think-then maybe it will eliminate her need to lie.

I wish you and your family the best of luck.