IMHO it is a drama. When you go into the theatre you decide to suspend
disbelief so that you can enjoy the experience. Children in my
experience have a very good idea of reality. However, they have a
happier fantasy life and they spend a lot of time in it. These issues
about Santa or the tooth fairy have similar traditions in other
cultures. It seems that this is one way to help the child understand
how to continue to enjoy the experience.
This idea occured to my BTW when I was an undergrad. I spent three
years working in the dramas of my school. I conducted my little survey
with these thespians. All of them had a profound love of the rituals
surrounding these stories. Not only that, but once the "truth" was
officially revealed, they (as I did) continued the rituals.
As this happens the child is able to generalize the concept from the
specific "Santa Claus" to the general "spirit of Christmas".
I have never heard of this theory in any publication, but I am sure that
someone else has thought the same thing...
Marie