Telling a story in an overblown, exaggerated way to make it seem more exciting is sensationalism. Trustworthy newspapers avoid sensationalism, instead sticking to the facts.
If you write a story for the school paper with the headline "Aliens Suspected in Graffiti Incident," your editor will probably accuse you of sensationalism. Sacrificing accuracy for drama may get you readers, but your sensationalism means they can't trust the stories you write. In philosophy, on the other hand, this word is used for the belief that true knowledge is based solely on what you perceive through your senses.