'twas Aeneas' tale to Dido: it was the story that Aeneas told to Dido. Aeneas is a character in Homer's Iliad, and the hero of Virgil's Aeneid. Dido, Queen of Carthage, fell in love with Aeneas, and committed suicide when he abandoned her. All of this information would have been familiar to any educated person in Shakespeare's time.