Why is it necessary? Why do you need to lie to your children? Teaching them that lying is "fun" is absurd, so many problems are rooted in tradition and "because I said so" or belief in mythical good and bad guys and boogiemen.
I prefer to be straight with my young kids when possible, but even I have to admit that mythical type stories carry a lot more staying power with young kids than a stern warning about real danger from their parents.
The context we have as adults about the consequences of things like death are not fully developed in young children. However, they pick up on stories and remember details of stories very clearly.
Moving important lessons into the context of stories makes them resonate more with young children. It’s as simple as that. You can also give them the real-world explanation at the same time, but the story version will almost always have better staying power in a child’s mind.
As you say, children struggle with the concept of death, as any parent who has had to explain the death of a pet to a young child will attest. Depending on age, no matter how you attempt to describe, there's always that "but they're coming back, right?"
So a good thing then?
Also, long before that, you've cultivated a tradition of believing ridiculous nonsense for which there's no easy cure or gurantee it can be remedied before it ends up creating even bigger problems