I tend to believe the reverse is true: that it's adults who have the most trouble separating fact from fiction. A child knows that real crabs on the beach do not sing or talk like the cartoon crabs in The Little Mermaid. A child can accept all kinds of weird-looking creatures and bizarre occurrences in a story because the child understands that stories have different rules that allow for pretty much anything to happen.
Adults, on the other hand, struggle desperately with fiction, demanding constantly that it conform to the rules of everyday life. Adults foolishly demand to know how Superman can possibly fly, or how Batman can possibly run a multibillion-dollar business empire during the day and fight crime at night, when the answer is obvious even to the smallest child: because it's not real.
- Grant Morrison
Original post on Dreamwidth - there are comments there.