My daughter, age 8 and well adjusted generally, occasionally writes a letter back to her [tooth] fairy . I saw this article recommending writing tiny letters and it seems just too adorable not to do something similar. Is it ok to respond? No lasting damage likely from letting them believe in magic a little longer?
(As a preliminary matter, we don't do Santa Claus, the tooth fairy, etc. in our house, but I don't see anything wrong with them.)
Fostering myths about make-believe creatures like the tooth fairy is a form of lying, traditional and cute though it may be at the time. I understand your question to be based on worrying that the more in-depth lie involved in writing responses to your daughter's letters will hurt her worse than the basic lie might have on its own.
Legions of kids make it to adulthood without major trauma resulting from learning the truth about the tooth fairy. And no matter what, I can't see any EXTRA harm at all resulting even temporarily from a few cute replies to your daughter's letters. If anything, she will hopefully appreciate the time you put into giving her good feelings as a small child. Now that you've bought into the tooth fairy bit, full speed ahead!
My own opinion is that there's a big gulf between "don't maliciously spoil a young child's magical beliefs" and "actively manufacture false evidence for an older child." I consider good critical thinking skills important, and 8 is not too young to start flexing those cognitive muscles. I want my son to always know that for anything he asks me, he can count on me to give my absolute most truthful answer to the best of my ability, and that I won't purposely lead him off the track of finding out how the world works. I dunno about age 4, but at age 8, those core values would (for me) trump "adorable."
Of course, it all depends on whether the kid thinks the tooth fairy is literally true. If she knows it's a game and is playing along (even if she isn't sure exactly which adult is playing the part of the fairy), it's all fine.
A good portion of the world believes in Santa, the tooth fairy etc - and it doesn't seem to damage them. These beliefs tend to go once kids get older, but I believe that encouraging the imagination as long as you can will help children remain creative as adults.
I'm pretty certain my eldest knows the tooth fairy is not true, now he is a secondary school, but he plays along with the excitement for the benefit of his little sisters.
This year the kids got letters back from Santa (postmarked the North Pole - very convincing) and they loved it.