The thing is Santa really isn't real. I mean the whole story is indeed a fraud as is the tooth fairy and everyone does find this out sooner or later. That isn't the same as a religious belief - santa and tooth fairies are indeed provable fraud. My DS makes this distinction easily and I think it is indeed an important one.
There are a great many things that are provably not real, like [insert favorite conspiracy theory here], but people believe in fervently anyway, and the point is that arguing with such people is, at best, a waste of time, at worst, an invitation to violence. Learning to choose your battles in these situations is an important life skill.
