Boston — Jay O'Callahan is standing somewhere in the twilight between literature and theater. On the shadowy stage of the Next Move Theater here, the Massachussetts storyteller looks like a lightning rod, galvanized with the mystery and fire of life. One hears a bit of the Irish poet and the song of the minstrel. There is the remembrance of what it was like to read as a child - all the characters pouring out of the pages into your tabula rasa mind.
Only this isn't childhood fantasy.
* It's the United States in depression time, and someone is losing his farm; the local schoolteacher is a massive tyrant whose most menacing gesture is called ''silent thunder.''
* It's Hungary after the Napoleonic wars, and times are hard for a suffering people, when an old man waves a crooked finger in the face of Napoleon.
* It's Harvard, Mass., in the 1920s, and a despairing woman's life transforms itself in hidden ways.
Jay O'Callahan spins tales as indelible and populous as Fellini's ''La Strada'' or Twain's ''Adventures of Huckleberry Finn.'' There are characters as finely etched as those in a novel, as palpable as those in a play. They all come out of the ether as if conjured in the mind of Melville. And you know that something more than another performance is going on here: An ancient art form is changing.
Storytelling is stepping out of its accustomed magic circle into the world at large.
The art of weaving tales without the aid of scenery or props - much less cameras and lights - enjoyed a robust resurgence in the '70s, and it has retained a hefty following in the '80s. Sudden interest in the press - evidenced by eloquent articles, such as one carried by Time magazine in 1981 - helped provide a tail wind to storytellers.
But some storytellers have worried that - unless the art form expands its horizons - ''we'll be like folk singers in the fifties: a big hit that fell back on its roots,'' as one practitioner said.
For the most part, storytelling has remained a charming craft or folk art that busies itelf with ancient tales, myths, and legends.
Not that there hasn't been magic in the concoction. It's just that the material has had so little to do with how we live.
Which is where the singular contribution of Mr. O'Callahan comes in.
He may not be the only storyteller to focus on life as it is lived at the dead level. But his mingled talents as former novelist and actor so enrich the brew he serves up, it is hard to imagine anyone coming closer to the heart of storytelling as a form of human chronicles. His stories are scratching in the vein of ''Let Us Now Praise Famous Men,'' the book of language and pictures by James Agee and Walker Evans that put the life of depression era men and women on record.
There's a mighty distance between the art of Jay O'Callahan and that of Leo Tolstoy or even Vladimir Nabokov. But it is a distance you can watch him inch along over the years, as he works his way into deeper material.
The gap may never be bridged. Novels, after all, have greater sweep and time duration to deal in. Still, Mr. O'Callahan has moved, in only a few years, from the heart-wrenching simplicity of ''The Herring Shed,'' with its relatively flat character/plot structures, to tales like ''The Lighthouse Man'' and ''Edna Robinson,'' which grapple with characters on a far more complex level.
In these stories, one encounters a man in whom ''you could almost see a fine watermark stamped on his soul''; another fellow with ''a smile like the crack of an apple''; and Edna Robinson, whose ''elbows bruise the air as she marches into town'' and then ''brush the air,'' as she wanders uncertainly into a new life.
Mr. O'Callahan's lightning characterizations sketch these figures in vivid colors. Ladies, children, hobos, mosquitoes, even sprouting weeds have a life of their own. And it's a life he gives them in a plentitude of emotions. He's listened to people and watched them, and he gives you tender, searching portraits of their inner lives.
''Village Heroes'' (appearing at the Next Move Theater in Boston until Nov. 18) gives you these portraits at the same time it carries over some of the charm and simplicity of earlier storytelling.
Mr. O'Callahan was called ''a theatre troupe inside one body,'' by Time magazine. That he is now launching this ''troupe'' in a legitimate theater setting is critical to his future and that of the art form.
He is saying, by insisting that his pieces can be done in theaters, before traditional theater audiences, that storytelling has some larger comment to make on the flow of life. To hear him tell it, we are all heroes in a village of our own making. And in this village - how could we have missed it? - we are all part of one another.
That's the simple, and not so simple, tale he weaves so well.