Lore % chance basically gives you more guesses the higher your lore is. Typically any of the lore mini games can be easily beaten with 13 guesses.
The prelude is fairly large. I won't spoil how many areas there are, but you probably have a bit more to go.
Lore items are used to unlock Legendary journal entries, as well as upgrade Legendary items such as the Amulet from the legendary quest you received from listening. The higher the lore item, the higher the chance it will unlock a journal entry. To unlock an entry find the legendary quest in your journal and click on one of the locked entries. The entries are clues which will tell you which area and quest you should do to get the item to drop. It is a rare drop though and may take several attempts to find it. The clues try to mislead you, but there will always be at least one that points you to where you should search/quest.
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