Lyric poetry - Shakespeare's sonnets - is poetry that resembles songs, often devoted to expressing a feeling. Narrative poetry - Shakespeare's Venus and Adonis - is poetry that is focused on telling a story.
The distinction showed up in my continued reading of Megashift from Plot to Character In American Short Fiction, although the terminology is slightly different. Here the author is talking about Washington Irving, the guy who wrote Rip Van Winkle and the Legend of Sleepy Hollow:
"Irving was fully conscious of the tension in the short story between the lyric impulse, with its stress on unity of emotion, and the ballad impulse, with its emphasis on a controlled unity of action." [p. 27]
So "ballad" here stands in for what I would call narrative. It's funny how slippery literary terms are. Different groups of writers just have different terms for talking about things. It makes discussions harder!
I mean, why talk about prose short stories in terms that refer more properly to poetry?
A dictionary of literary terms,
I'm sad to say, is like a bucket of worms:
You pick one out, and sure enough, it squirms.