Our DD was 3-4 when she went through a phase of constantly asking us, "Is that real?" There was a lot of anxiety around the question at that time, so she was quite relieved to know that there was no such thing as magic, vampires, alien visitors, ghosts, trolls, or whatever... it's all just stories. Thus secured, that knowledge set her free to enjoy fantasy without fear. She has gone on to become quite a fangirl of Harry Potter, Hunger Games, the Marvel movies, and other franchises with extremely dark and frightening themes for sensitive children.
So basically, the truth did not squash the fantasy in her case. It made the fantasy better.
We don't have the problem relating to science versus religion, as we are not religious. Thus, our DD gets best-known scientific answers to those questions.
