Bless you, it is a hard thing to navigate every year. In our house we are honest while keeping the ‘magic’ of Christmas.
Santa is a story about the Christmas spirit, the Easter bunny is how adults make Easter special for children, the tooth fairy is how we reward you for growing up etc. DC knows they are fictional, and always has, nbut we still do all the traditions and they are still excited. My SIL does the same so all of the cousins are on the same page and none of the children have ‘ruined’ anything for another child (afaik).
I treat holidays a little bit like religion as an athiest family. We educate DC about the religion, say some people believe in XYZ, and then look at how they celebrate their holidays (do some crafts or visit a local celebration) to teach them about other people. We don’t then expect DC to believe what other people do but learn to be open minded and appreciate religion and culture for what it is.
For questions about spooky things like ghosts and magic I am also honest. ‘I don’t believe they are real, some other people do, but you are safe and there are no ghosts here- that’s just a silly Halloween decoration’.
I want them to decide for themself what they believe in with all of the facts and I didn’t want to lie and disappoint somewhere down the line.
Edit: SPAG, I am typing and walking.