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The word "聊斋志异" is formed from four characters: "聊" refers to Liaocheng, a place associated with the author, "斋" means studio or study, together "聊斋" naming the author's studio; "志" means records or annals; and "异" means strange or supernatural, so the combined term literally translates to "Strange Tales from the Liaozhai Studio", directly describing its content as recorded supernatural stories from that studio.

Word Definition - 聊斋志异

liáo zhāi zhì yì Strange Stories from a Chinese Studio, Qing dynasty book of tales by 蒲松齡|蒲松龄[pú sōng líng]