I've had discussions with our 5 year old about this. She asked for really reasonable items (a play tent and two stuffed animals) but that was after asking for a real unicorn and a live pet dolphin. We discussed how Santa considers what she says she'd like, but he also talks with mommy and daddy in case there are things we think she'd like better that she hadn't thought of. She was fine with that!
Alli. Wife to C Mom to M ('07) S ('10) B ('13)