Chinese readers have never agreed what kind of book this is. The Han bibliography classed it under forms and prognostication. The great Tang and Song catalogues moved it about, and the imperial Siku quanshu of the eighteenth century eventually filed it under fiction, having decided it was not reliable geography. Sima Qian, writing his history around 100 BCE, said plainly that he would not venture to speak of the things in it. That verdict, from the most authoritative of early historians, tells you the credibility problem was recognised at once.
Yet it was used. Physicians and alchemists mined it for materia medica, since so many entries specify what a plant, mineral or animal does to the body. Officials and geographers took its mountain sections seriously enough to attempt identifications of real ranges and ore deposits, and some of those identifications hold. Poets and painters took it as a storehouse of images, and it stands behind a long line of Chinese strange-tales literature. Modern readers have added their own uses, from claims that its distant lands describe real foreign territories to its wholesale absorption into video games, film and fantasy.
Its indispensable role is different from all of these. Early China produced no systematic mythography, and most of what would have circulated orally is gone. The Shan Hai Jing is where the surviving fragments happen to be recorded: Xiwangmu, the Queen Mother of the West, who appears here in her earliest form with tiger's teeth and a leopard's tail, an epidemic-dealing power quite unlike the benign goddess she later became; Kuafu, who chased the sun until he died of thirst; Nuwa; and Jingwei, the drowned girl transformed into a bird that carries twigs and pebbles to fill in the sea that killed her. Without this compilation, most of that would be lost.