We assist children to believe in fantasy because we engage in holidays with them where a mythical character is celebrated. An example would be the Easter bunny and Santa Claus. We further indulge with the Tooth Fairy. It is harmless and adopted by most of us in North America. We assume that children will engage and enjoy being a child a little longer if we make this belief part of our family celebrations.
We already know they have a very rich inner world of make-believe and are easily persuaded that there are fascinating creatures out in the world. We add to this belief by giving them stuffed animals that they ask for. First they do comfort the child as something to hold when they are afraid or a little lonely but there is another reason. We know they need something to love.
But it is not till age 10 that they actually question such beliefs as Santa Claus which has a lot to do with reasoning. Other kids at school also challenge their beliefs and make them harder to hold onto. Peer pressure changes everything. Prior to that in the age group I am dealing with for 6-8 year old kids, they are still willing to believe. In fact, those who see films and videos that highlight fantasy or magic tend to be more creative.
While as adults we might not believe in fantasy, we do like to figure out magic and enjoy the concept that there are some elements we cannot control or know about. Superstition comes into play for some. Others have lucky numbers or the belief in the supernatural. So while it changes, something remains that gives us pleasure. We choose to hang onto the possibility there is more out there which really means we never fully let go of our beliefs.