We treat the Vedas including the Upanishads as representations of our highest Truth. We have Itihaasas like Ramayana and Mahabharata that provides the Bhagavad-Gita, which contains the essence of the Sanatana Dharma. We also have the different Smritis as the rule books. What exact role do the Puranas play in the Sanatana Dharma?
According to the Devi Bhagavatam, for the benefit of the Sudras, lower Dvijas and women Puranas are composed.
18-24. At every Manvantara, in each Dvâpara Yuga, Veda Vyâsa expounds the Purânas duly to preserve the religion. Veda Vyâsa is no other person than Visnu Himself; He, in the form of Veda Vyâsa, divides the (one) Veda into four parts, in every Dvâpara Yuga, for the good of the world. The Brahmânas of the Kali age are shortlived and their intellect (Buddhi) is not sharp; they cannot realise the meaning after studying the Vedas; knowing this in every Dvâpara Yuga Bhagavân expounds the holy Purâna Samhitas. The more so because women, S’udras, and the lower Dvijas are not entitled to hear the Vedas; for their good, the Purânas have been composed. Tne present auspicious Manvantara is Vaivasvata; it is the seventh in due order; and the son of Satyavati, the best of the knowers of Dharma, is the Veda Vyâsa of the 28th Dvâpara Yuga of this seventh Manvantara. He is my Guru; in the next Dvâpara, Yuga Asvatthama, the son of Drona will be the Veda Vyâsa. Twenty-seven Veda Vyâsas had expired and they duly compiled each their own Purâna Samhitas in their own Dvâpara Yugas.
Chapter 3, First Book
But have a look at the following verse where Lord Shiva is defining why Purana is so named.
Punya PApAdi KathanaAd RAkshashA DinibAranAt|
NavabhaktyAdi JananAt PurAn Iti Kathyate||
Because it tells of merit and demerit, Punyapapa, because it dispels evil beings like Raksasas, and because it generates ninefold devotion, Navabhakti, and the like, it is called Purana.
KulArnava TantrA 17.39
So, this verse gives three purposes of a Purana:
Tell what is PApa and what is Punya.
To dispel evil beings.
To generate devotion among the masses.
And, if you see, then it is only the Puranas which talk about Bhakti a whole lot more than any scriptures like Vedas, Smritis, Tantras.
What exactly is the role of the Puranas in the Sanatana Dharma?
This question can be generalized to, "What exactly is the role of Smritis (Puranas, Itihasas, etc) in the Santana Dharma?" because the Itihasas serve the same purposes.
There are two purposes of Smritis:
- To propagate Vedic knowledge to women, Shudras, other low-castes, and fallen Dvijas.
- To summarize and simplify the meaning of the Vedas themselves.
Purpose #1 is told by Suta Goswami (who himself was low-caste; a Suta), the narrator of many Puranas, in the Srimad Bhagavatam:
Text 25: Out of compassion, the great sage thought it wise that this would enable men to achieve the ultimate goal of life. Thus he compiled the great historical narration called the Mahābhārata for women, laborers, and friends of the twice-born [meaning fallen Dvijas, not merely friends].
Vedic knowledge had to be transmitted to them because they are either forbidden from hearing the Vedas (low-caste), because they don't do Vedadhyayanam (women), or because they have an incomplete knowledge of the Vedas (dvija-bandhus):
strī-śūdra-dvijabandhūnāṁ trayī na śruti-gocarā karma-śreyasi mūḍhānāṁ śreya evaṁ bhaved iha iti bhāratam ākhyānaṁ kṛpayā muninā kṛtam
So, the Itihasas, as well as the Puranas, serve the purpose of spreading the Vedic knowledge to everyone, regardless of caste, gender, or race.
Purpose #2 is given by many Vedic scholars of all 3 major Vedantic Sampradayas. Ramanujacharya says that the Vedas must be interpreted using the Itihasas and Puranas:
itihasa puranabhyam vedam samupabrahmhayet | bibhetyalpashrutadvedo namayam pratirishyati ||
This is not because the Vedas are imperfect, but because our capabilities and understanding is imperfect. The Vedic literature is so vast and infinite, that no one has enough time to do Adhyayanam of the entire Veda, so we get help from the Itihasas and Puranas in interpreting the Vedas.
The Itihasas and Puranas are summaries of Vedic knowledge, and were composed by great Rishis like Valmiki and Vedavyasa, who mastered many Vedic shakhas.
I think the Puranas add the element of 'Rasa' in the knowledge ecosystem of vedas or Upanishads. Apparently, Veda Vyas had once asked Rishi Narada when he was bit disappointed with lack of interest among common masses towards his various spiritual works. And at time Rishi Narada said that his works lacked in Rasa. And post that Veda Vyasa composed Mahabharata. Now whatever the anecdote is, one aspect is true that of all works of Veda Vyasa, Mahabharata is the most celebrated one. It is indeed the story telling, the narrative that has taken - not just the story, but the gospel truth - from one generation to the next. It is the presence of Rasa that makes it acceptable cutting across all boundaries. In fact, some stories of Upanishads are equally easy to comprehend because of this very reason.