We just used to talk from early about "that's a made-up story", "that's a true story", "is that a made-up story, or a true story?" (being just as happy for him to tell made-up stories as true ones, and treating them very similarly, asking follow-up questions etc., but wanting him to know the difference, and pointing out that he'd made a mistake if he said something was true when it was made-up). He picked up on this pretty young, and started to ask other people what kind of story they were telling him, too. I guess that might be a problem if you want him to e.g. believe in Father Christmas or the Tooth Fairy, but we didn't!
FWIW from conversations I've had with other parents I think it's a vivid imagination thing, not specific to gifties (though are gifties more likely to have vivid imaginations? not convinced).
