The Tooth Fairy (or Easter Bunny, or Santa Claus …) : a fun and harmless fiction, or a pointless justification for lying to children?
I think that it is just fun and harmless. As long as you don’t try to actually convince the kids that they exist if they are starting to not believe anymore or have friends who have already found out the truth. At that point lying to them will hurt them more because they will end up managing to find out that they weren’t real. So the kids would have to deal with the fact that the tooth fairy, or the Easter Bunny, etc aren’t actually real; and that you lied to them that they were.
But there’s nothing wrong with children (or just people in general) looking forward to things because of these fictitious characters. I think it make things like losing a tooth more fun. As long as a child isn’t purposely trying to pull out a perfectly fine tooth just to get the money from ‘losing’ it anyways.