Some archeologists and historians believe that the world goes thru different 'yugs'. Every yug however goes through destruction, at the end of which, civilization has to begin again. Mahabharat itself could be a tale of one of those civilizations that existed once upon a very long time. However, a lot of stories within the mahabharat need to be taken with a grain of salt.

Archeological expeditions have found palaces buried deep within the grounds with artifacts purported to be from the mahabharat times. Some religious theorists believe that during that time, people had mastered the art of spiritual science hence the technology depicted during that time could have been possible. Even radioactive remains have been found in the surrounding kurukshetra region of india pointing perhaps to a nuclear warfare.

Even the epic of Ramayana with it's unbelievable army of man and monkey may actually have some truth in that a race different than indians were considered to be the monkeys. If you look at some pictures of George Bush it's not that hard to believe why.