By the time the Arabian Nights are being penned, Rome has already converted to Christianity (and fallen). Christianity spread throughout the rest of Europe and Russia. Only a little behind, Islam had spread throughout northern Africa and western Asia. Aside from India and China, most of what we refer to as the civilized Ancient world had abandoned polytheism in favor of monotheism.
It’s no surprise, then, that the myths of the older Greek, Roman, Scandinavian, Egyptian, Babylonian, Sumerian, and Persian cultures had to make way for new myths and heroes that embraced monotheism.
For Muslims, this meant the Arabian Nights to bring in heroes such as Sinbad, Aladdin, among many, many others (seriously, everyone should pick up a copy of Arabian Nights). Europeans went their own way embracing knights such as Arthur’s famous cadre.
Like with Sinbad, the chivalric, knightly tales are a blending of the old with the new. None of the European stories plagiarize the Greeks as much as the Arabian Nights do, but that’s largely because the Europeans had forgotten the Greeks and Romans until the Italian Renaissance began in the 14th century.