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I honestly don't really understand them completely and mostly do it for the end bonus of legitimacy and special buildings.
But your question yeah seems to be waste to buy rulers to spread it. They don't seem to do much, unless just rolling around in gold reserves is a waste to me also.
Hire a court chronicler (bottom of the Legends tab).
Set the chronicler to do the task you want; one of them is to spread your legend, another is to get neighbouring rulers (their realm must border a county with your legend) to support your legend, spreading it in their realm.
Your legend will spread, giving the legend modifier benefits to all counties with your legend in it. View the legends map to see it spread. After enough counties have your legend, you can upgrade it. The benefits are good and the unlocks after completing the legend are great too, absolutely worth the money.
You have to have a Court Chronicler to start and primarily promote them but can add your Poet and Musician to promoting; you have to pay those folks extra to do that (by activating little sub jobs in the court positions menu) and can choose to promote the legend in realm or abroad. You can also bump promotion with events and activities and rope other rulers into promoting your legend by event & scheme/interaction (and helping with the cost).
Will let you do OP things like instantly convert your entire realm, instantly de jure drift entire kingdoms into your empire, or get a claim on all of something (like all of England) with the click of a button. The special buildings are decent too - but not quite as OP.
Can give you opinion bonuses (and other small bumps like travel safety bonuses) wherever they have spread - which is up to 500 counties.
I can't see any numbers anywhere. Could it be disadvantageous to have them promote it?
Which is better usually for your chronicler, promote locally or abroad?
They get an opinion boost with you, if you count that as a benefit. Sometimes, by interaction/event, you can 'persuade' them to promote your legend by granting them something (an artifact, favor/hook, gold) which I guess you could count as a benefit. They mostly provide a boost to your legend spread chance and pick up some of the cost of promotion. There is no 'downside' to you - unless you count the possibility that you give them something and they don't promote your legend for very long (which they do sometimes by chance & sometimes because they just ran out of gold).
Promoting inside your domain is cheaper but, once you have all your counties 'legendized', you have no choice but to promote it abroad. To continue to promote it within your lands would be a waste of time & money.
I honestly don't understand this at all. How does a legend start? how do I make one? What's the benefit? I've been playing this game for so long and never heard of this or had an event involving this???
First off, do you have the 'Legends of the Dead' DLC? You have to have the DLC to get the legends.
The benefits I kinda covered in my first post of the thread. If you want more specifics, the WIKI, Youtube videos, or a Googlesearch will provide those. There are generic legends, region specific legends, and a dynasty prestige branch for them. They come in three 'flavors'; spiritual, dynasty, and 'heroic' (the third 'unicorn flavor' escapes me at the moment). :)
It seems they do get a bonus when they promote.