Taking a different approach to your question: Your premise is based on the assumption that a child will believe everything written in a book is true. (Also that children live in a dream world only if they are lied to.)
Where did you get this first idea? Did you believe this at one time? Do you know anyone who believed it at one time? The answer is probably no. That concept doesn't come for a while.
All children fantasize regardless of whether you read them fairy tales or not. Do you think a small child playing with a truck isn't imagining anything about the truck? That a gingerbread cookie in the shape of a man is only a cookie with a funny shape? That a mud pie is a pie of wet dirt? Or if a child laughs if you pretend a bananna is a cell phone, that they don't understand why that's funny?
Children only that believe what's written is true long after they know about truth and lies, and in the context that a book is presented consistently as truth by significant persons, e.g. when parents teach that the Bible is true, or a textbook of history, or science, or math is true.
"But the book says it is true"
Someone would have to introduce her to this idea (at this age, that would be you), and why would you do that with a book of fairy tales?
The truth is young children lie, even though no parent I know of teaches their child to lie, and they know the difference. In some experiments, 30% of 2 year olds will lie to cover a transgression. How can that be, if no one ever introduced the concept of duplicity? Children lie as a matter of norm, to protect themselves or someone they love.
There have been studies of children and the ability to discern and tell the truth from many standpoints and for many reasons, probably the most critical being the ability of a child to give testimony regarding a crime they have witnessed. Children as young as 3 years of age can identify a lie, and can testify in a court of law.
Three experiments (Ns = 123, 103, 177) were conducted to address the assumptions underlying the court competence examination that (1) children who understand lying and its moral implications are less likely to lie and (2) discussing the conceptual issues concerning lying and having children promising to tell the truth promotes truth-telling. Both measures of lying and understanding of truth- and lie-telling were obtained from children between 3 and 7 years of age. Most children demonstrated appropriate conceptual knowledge of lying and truth-telling and the obligation to tell the truth, but many of the same children lied to conceal their own transgression.
The benefits of fairy tales have been discussed by others. Your concept of children believing everything they are told is faulty.
Children's Early Understanding of Mind: Origins and Development, C Lewis and P Mitchell
Children's conceptual knowledge of lying and its relation to their actual behaviors: implications for court competence examinations
From little white lies to filthy liars: the evolution of honesty and deception in young children.
Little Liars: Development of Verbal Deception in Children