This great post by Justin Taylor On Scary Stories and the Moral Imagination quotes G.K. Chesterton, Andrew Peterson, and Russell Moore in defense of the traditional fairy tale.
Summary: You cannot isolate your child from the awareness of evil, but you can show your child the triumph of good over evil. Thus, the fairy tale effectively shapes the child’s moral imagination in a way that a story devoid of evil would not be able to do.
My favorite part of Taylor’s post is the G.K. Chesterton quote:
Fairy tales do not tell children the dragons exist.
Children already know that dragons exist.
Fairy tales tell children the dragons can be killed.