Sarah knows about Santa.
Sarah: Santa flies in a sleigh with reindeer!
Me: Yup. That's pretty cool!
Sarah: He's just imaginary though.
Me: Well. (hey, I didn't tell her that)..yes, but he's still fun.
Sarah: It's fun to pretend!
She goes along with all the Santa stuff including wanting to do the lap thing at the mall, but there's no getting anything by this kid - she completely understands he's not real. More interesting - she's completely willing to and enjoys playing the game of pretending he is real just for the fun of it. I know adults that don't get that concept.