Anonymous wrote:"Yes, honey, a lot of people believe in God and Jesus, but they don't actually exist. You can't ever tell your friends that, though, because it could make them very sad or very angry."
I know this is tongue-in-cheek, but you can actually have some surprisingly nuanced conversations with relatively young kids about this. My Jewish kid goes to an Episcopal school, so absolutely Jesus comes up with some regularity. And we do absolutely talk about the fact that we know historically that Jesus existed, but while some people believe that he was the son of God (and Christmas, Easter, etc.), our family believes that he was just a man. And it's okay for people to have different beliefs about that (and about God, other deities, or the lack thereof).
Honestly, the God and Jesus conversations are pretty easy--he gets that different people believe in different supreme beings. The tougher talks have been about things like whether people have souls (and if they do, what are they?) and what happens when you die.
But luckily you have a little time on some of that stuff with a three-year-old!