This seems like a rather poor theory for improving memory retention. The brain indeed can not store everything, but it does not naively pick the most important

This seems like a rather poor theory for improving memory retention. The brain indeed can not store everything, but it does not naively pick the most important things to remember and discards the rest. Your brain has evolved various compression heuristics for different types of information that are exceptionally efficient. Good learning takes advantage of these heuristics. The narrative structure of stories is very much in line with how the brain optimally stores information (which is why we tell stories in the first place), so it is very easy to remember the gist of stories. Even if you forget specific details, you can likely recover them by recalling other elements of the story, like B had to happen before C because it wouldn't make sense the other way around. If you are watching television, you are almost certainly watching something with such a narrative structure, and you enjoy it because it is congruent with your thought processing. Conversely, so much of schooling focuses on remembering distinct facts - when did this battle occur, what was the name of the protagonist's brother, what is the molar mass of oxygen, what is the integral of dx/x, etc. The brain is not well suited to learning such isolated facts, but it's rare that they are presented in a way that is more easily stored. There are some cases, especially at younger ages, where it's standard to teach certain things in a more compressible way. We learn mnemonic devices like Please Excuse My Dear Aunt Sally or Roy G Biv. Perhaps the best example is putting the alphabet to music, using our brain's exceptional music compression heuristic to memorize a 26 character string. As we get older and we approach more advanced topics these methods tend to fall by the wayside despite the fact that they are just as effective on adults - a catchy jingle in advertising uses exactly the same mechanism. I think a restructuring of education to focus on a holistic learning process where information is presented in a wider, narrative context, with less of a focus on discrete facts than larger patterns, and carefully constructed mnemonic tools for specific data that is need to know would be the best approach.