An epic is a long poem about heroes and the great things they did — wars, voyages, the founding of a city. The Iliad is an epic, and so is the story of Gilgamesh, told aloud for centuries before anybody wrote it down.
The word stretched to cover anything built on that scale: a three-hour film with a cast of thousands is an epic, and so is a novel that follows one family across a hundred years. As an adjective it means very large and ambitious — an epic journey, an epic battle. In casual speech it has worn down to simply very good or very bad: the party was epic, an epic fail. Keep that last use for friends; in an essay it sounds fifteen years old.