Some parents say Santa adds excitement to a child's Xmas. I think this is a cultural myth that people repeat without having introspected about their own growing up. I find no truth to this. I look back to my childhood and the only time mystery was associated with Santa was the time I suspected he didn't exist, asked my parents, was told he did, but smelt a rat in the way I was told it. This resulted in some excitement the next year as I tried to stay awake -- not to see Santa -- but to confirm that my parents were he.
So, yes, there was mystery once I suspected Santa was make-believe; but I remember no magic before that. I can look back at my discovery and relate to what Kim says about Hanover, using her logic and observation to figure out Santa does not exist.
It's unreasonable to expect a child to feel something special about Santa bringing gifts down the chimney if the child actually and completely believes that Santa is for real. To such a child, this is just like saying that dad comes down the chimney and places the gifts there. Obviously a child will be excited about presents. However, young children know so little about the world that Santa flying around is not magical at all, unless you tell them that it is.
In summary, the real fun and mystery don't come from the myth, but from the realization that that story is a yarn.
I would encourage parents to use the Santa myth in this fun way. On the other hand, I would strongly discourage parents from playing the game so well that the child has no clue that Santa is make-believe. The couple of stories I know of this kind have not ended well. Typically, another kid will reveal the truth, and your child will be left with a feeling of being let-down, and a feeling of being stupid. They will blame you, and you will be worthy of blame. It's a game: so, play it that way, and it'll be interesting; make it real, and it won't be as much fun. Ironical, but true.
In my own son, I've seen him be excited -- over the years -- about Thomas, and Spidey, and Batman, and Harry Potter. When a local fun-railroad did an annual Thomas event, with a blue-painted engine, my son always wanted to visit. When Spidey was posing outside the IMAX show of one of his movies, my son wanted to have his photo taken with Spidey. He, and the other kids attending the event were all excited. Yet, I doubt anyone of them believed that Thomas or Spidey was real.
Santa myths (think "Polar Express") project a certain type of benevolent world, where the people with the magical power can always fix things that go wrong, and will. I think this is what parents mean when they say "kids need a little magic". On this I agree with Kim 100%, when she says: "I think it mostly means that kids need to know that wonderful things are possible. What I really don't get is why wonderful things have to be unattainable without magic." (emphasis added)
In her follow-up post, Kim elaborates that parents who speak of magic want their kids to retain their innocence. I think this describes the underlying philosophy. Unfortunately, Santa and so on are pretty poor ways to achieve a benevolent world-view.
There is only one way to bring up a kid believing in a benevolent world: first, you have to believe it; second, you have to project it. I don't think you can project it convincingly if you fake it: not to your kid, who is with you so much. So, you have to think it is true. The second step is not fully automatic; it is distinct. You have to consciously explain your view to your child, and never abstractly; always implicitly via other concretes. [This raises so many more points: "what is benevolent world view", "how to project it?", but this post too long already.]
Imagine parents who are bitching about their "friends" in the hearing of their children, constantly being cynical about the world, and imputing evil motives too easily. Can Santa and the Easter bunny show their kids that benevolence is possible? I think it's like spraying room-freshener over a stink. And, what happens when the kid grows up and realizes that the myth is myth and the rest is real? At worst the grown-up kid is left with the lesson that benevolence is only possible in magic. What better ground-work can we lay for cynicism!
Finally, my proof is in my (10-year old) pudding. He has an extremely benevolent world-view. Among his his class-mates, there are some like him, but there are others who are very jaded and cynical. I know others among the benevolent group that found out about Santa early, as our son did. So, I rest my case!