The collective name for the portion of the Talmud and midrashim not included in the halakhic portion of the Oral Torah. To understand aggadic texts, often very simple in form, it is important to remember that they are intended to expound the most important principles of Judaism, which can only be explained in an accessible form through example or allegory.
The Jerusalem Talmud, like the Babylonian Talmud, contains, in addition to halakhic material, a vast number of aggadic traditions, stories, and discourses on various topics. Aggadic material not included in the Talmud was collected in separate books beginning in the 3rd century CE. Aggadic literature is vast. Here are just a few: Midrash Rabbah, Midrash Tanchuma, Psikta de-Rav Ka'ana, Midrash Shmuel, Yalkut Shimoni, Ein Yaakov, and others.