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Embroidered
anecdote?
(4)
Embroidered anecdote? (4)
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The whole clue is the definition (& lit or double definition).
How the clue works
Both halves of this clue do the same job. Embroidered points to YARN as the thread you'd stitch with, and anecdote points to YARN as a tall tale — you know, "spinning a yarn". Two independent definitions, one answer.