Witnesses in a trial may reiterate what they believe to be an accurate statement of what happened before their very eyes, but this may be distorted if they were stressed at the time. During a bank robbery or hostage taking they will be stressed if they are the victims.
Certain parts of the brain are known to be affected, when a memory (engram) is created. Once a memory is made and filed, recall of this is the same whether the engram is true or false.
In mice the chemical structure of a memory of a bright flashing light was identified. This chemical "program" was induced in some mice. When electric pulses were applied to the animal's feet for memory recall, those with the program froze in shock, while the others reacted normally. Obviously, the mice deemed the false memory to be absolutely real. Placement of the memory is fixed and immediate.
Human memories tend to improve with age. As time goes by, what actually happened and what really occurred during childhood is rosier. Bad memories affect health. Amnesia could be a safety mechanism to forget a very bad, painful memory.