This topic came up many a time when my kids were young - pre- and grade school. At that point our approach had 2 elements.
First, we said each person/family gets to say what they believe in, and what rules they follow in their houses. While we do not need to agree with them, we should respect their ability to make their own choices, the same way we ought to expect our choices to be respected. The fact that someone may hold religious or other beliefs different than ours, does not in itself make them a better or worse person than us.
We also told them that many of our family members had strong beliefs, and that we respected those individuals and, as part of that respect, did not openly question their religious beliefs.
Second, we said belief was a very important decision, and ought to be made intentionally. So we joined with our kids in brainstorming why people might believe in various things, and clearly expressed our strong reliance on reason. In doing so, we openly told them what we had concluded, and acknowledged that having rejected religious belief, we were likely not the best advocates for those positions.
A couple of anecdotes:
My eldest - now 25, recently told me there was a time that she really wanted to believe. Around age 7 or 8 or so. Tried to pray and I’m not sure what else, but pretty soon concluded it was silly.
When the kids were young, we started attending UU churches, so the kids could benefit from the RE - including comparative religions. It was funny as they got into high school, situations arose where it was apparent my kids knew as much about non-christian beliefs as christian ones.
Our communities were very christian, and we tried - with varying success - to teach our kids that socially it was generally beneficial to keep their lack of belief to themselves. As they aged we commiserated with them how much it sucked that nonbelievers paid a social price for expressing their nobelief as openly as believers expressed their mythologies.