Hii! This may be a bit of an unusual question, but would you tell your (little) children that Santa Claus exists? Or do you think it is better to teach them the truth from a young age and not encourage any false beliefs?
I don't think I'd need to tell them about Santa Claus, as it's culturally pervasive. But I wouldn't ruin it for them, as I wouldn't want them to miss out on the fun. Nor ruin it for other kids. You can show a child, "hey, that's Santa Claus," the same way you would point at someone dressed as Aladdin at Disney Land and say, "hey, that's Aladdin." You don't have to claim he's actually real. You just go to see Santa each year and get a photo taken, the same way you get your photo taken with Goofy.
Keeping children's imaginations alive as long as possible is also a virtue as well - crushing a child with unvarnished reality at a young age is just unnecessarily cruel.
It's worth noting that we don't perpetuate the belief that Santa is real into adult and terrify children into sticking to believing it no matter what doubts they form about it. Nor do we make Santa a part of everyday life. Children figure out he's not real, and we don't contest it or claim it's a moral failing. It's a transient idea that falls away naturally.
And when they do start to doubt, we can say things like, "what do you think?" to help them examine what they understand or think is likely or real.
I don't think it's necessary to be obsessively honest with kids, especially younger ones. It's okay to fudge things, simplify them down, or leave out some details so they can comprehend them.
But it's important not to scare them with a false understanding of the world. Santa Claus isn't scary. Telling a kid about hell, or that if they eat all their Christmas candy, they'll balloon up and won't fit through the door any more is a great way to give them unhealthy fears and obsessions.
Ultimately, as a parent, your household is not a democracy, and not everything is a debate. My mother used to say, "I don't have time for three good reasons why." While a general preference for the truth - or the vicinity of the truth - is desirable, I think it's okay to pick your battles on what's important to be truthful about, and what ultimately won't matter in the long run. Lying about their "immortal soul" being damned to eternal hellfire is not one of those "won't matter" type of things.
And in more cases than I think people realize, the easiest thing is to not suggest anything at all to the child and ask what they think.