I’m not familiar with Five Children and It. I just wanted to say that when my girls were little, I wondered if we should skip the fairy tales because of all the witches and whatnot. Then I read somewhere (Gurien? that guy with the unpronouneable name) said that fairy tales are important for children because it exposes them to evil and they learn that evil things can happen to them, but that good triumphs over evil.
So I read fairy tales to my children. When they ask about witches and things I explain that there are some evil people who worship satan rather than God.
Everything like My Father’s Dragon, Cinderella (my favorite!), Roman and Greek Gods and Goddesses, Santa Claus, etc., I explain as being make-believe.