Very young children tell what adults might call lies, but to the child, are very much the truth, as they see it, as they've interpreted it, and using the language skill they have, which at 3, lacks something ... like nuance, and context.
Thus, a conversation about 'we don't hit, we wouldn't like it if someone hit us' and 'we don't throw... ' and being reminded of this when it happens... becomes 'so and so hit me/threw me/threw so and so..'
Dreams become reality, a fire escape green man is an actual green man, a pat on the shoulder becomes a hit, and so on and on.
These may be untruths from an adult perspective, with an adults experience and knowledge, but they are not the malicious lies adults tell, in the full understanding that someone else can really suffer as a result!