Yes, it has become a kind of battle cry like a fair number of other words that are just used rhetorically in order to try and get the upper hand in a conversation.
Exaggeration is often used to live through another person whose car does travel at 130mph. Justifying the act of lying is subjective. What if you had an affair and denied the fact to your wife? Even if the affair is ongoing, is it worth destroying you children's lives?
"I always lie," called "The Liars Paradox." "One upmanship," "lies of omission" are examples of self conceits, where we convince ourselves that the untruths are not really lies, but something else.
For a friend of mine, when exaggeration fails lying takes over. They are super competitive in all fields. It can be embarrassing when they know that you know they are telling one-up porkies. They even give you a guilty look but carry on. I never question these lies, humiliation could break up a good friendship, so why take the risk.
I would never confront a liar. They make me cringe but I know deep down that they know that I know and yet they are prepared to demean themselves. Silent pity is more appropriate to retain friendships, it's no skin off my nose.
Would not consider them much of a friend. I don't even associate with one my daughter's who just lies about everything.
I try to differentiate between outright lies, tall stories and likely story. One usually has to know an individual fairly well in order to determine any one of these.
"Your car could never keep up with mine; I just had it up to 130mph!" If someone says that to me, to my face, I know right away that he is challenging me to a car race, he using his car and I using my car. So, without any intention to denigrate, that statement is neither exaggeration nor lying. So, it's my call to take his challenge or not. I will tell him that I will think about his challenge. In the meantime I will do some background checking to observe how old his car is compared to mine, etc. When I am sure that his car to my observation cannot run faster than mine, I will take up his challenge. Exaggeration is a figure of speech, lying is saying something that is contrary to what you know in your mind to not be true or to not be a fact.
If you lie to discredit somebody unfairly, it is inevitable that person will be damaged because of peoples love of salacious gossip. You deserve all you get, however if you lie to gain attention in your empty life nobody is hurt, no harm done.