Look at how closely it follows the known facts. If it seems to deviate a lot, it's probably 'inspired by true events'. For example, if a movie has a historical setting but adds a lot of fictional characters and relationships that have no basis in historical records, it's inspired. If it tries to recreate real events and people as accurately as possible, it's 'based on a true story'.
One way is to look for historical references. If the work mentions specific events, dates, or locations that are known to be real, it might be based on a true story. For example, if a movie shows a battle that actually took place in history and gets the details right like the uniforms, the weapons, and the tactics, it could be an echo of a true story.
Yes. Working based on a true story has its own charm. It allows the creators to draw from real emotions and situations. For instance, if it's a novel based on a true story, the author can explore the real - life implications, the human nature in those real events. It also has a responsibility though. Since it's based on truth, it has to be somewhat respectful of the real - life counterparts and the facts associated with them.