This sentence is from the first page of the book "흰곰한테 시집갈게요":
성탄절 이브, 모야모와 아누는 흥겹게 캐럴을 부르며 반짝반짝 예쁜 크리스마스트리로 장식된 거리를 걷고 있었지.
From my research, 지 could be used for emphasis (a bit like tag questions) or indicates some kind of intimacy. But I just don't see how that fit in here?
In general, when not a question sentence, -지 most often implies some kind of mutual understanding, an indication that something is either obvious or the other party is known or expected to agree with the sentence. Without any context, we can't ascertain the meaning in this sentence. It would help if you could edit your question to include some context if possible.
Edit (context has been included)
@gaeguri gave a good explanation below. Even though in this case there might not be an actual mutual understanding (the reader might not know/assume/expect that 모야무 and 아누 are merrily walking around the decorated streets), simply acting as if there's a mutual understanding gives a sense of familiarity which is fitting for children's books. You wouldn't see this as much in books aimed at adults.
As JH- said, it shows mutual understanding. In this particular case, it is a children's story, and you'll see this a lot in children's stories or songs. In some cases it's because you're retelling a well-known story, so they will know this bit already - but in other cases, even though the listener/reader doesn't know the story, using this phrase draws them into the story, making it seem more familiar. It gives it a feel of a familiar, commonly-told tale (even when it's new!)
Especially in this story, the sentence describes what the children are doing on Christmas Eve, and it's a familiar action, that the reader will of course understand and agree with - even though we're reading this story for the first time, the actions are familiar and expected, so using the -지 ending draws us into this story, making it more familiar to us.
