It means that there one or two things in a story that are true, even though most of the story is not true.
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CliveI more often hear 'a grain of truth'.Me, too, but germ of truth is sometimes heard.
In my opinion, a "germ" of truth is better used when the intent from the very beginning is to misrepresent, mislead or directly manipulate the thoughts or understanding of the situation, or person to which the "germ" of truth is being presented.