I do omission or changing the subject. If asked directly and they are intent on getting the answer, I answer truthfully. Or I will simply tell them that they are too young for an exact answer but here's what I can say about it. I too was raised with a liar and it bothered me a lot. So I don't even lie about Santa/Tooth Fairy or anything. Oh and I am infamous with my kids for the noncommittal answer which I know they will remember and probably complain when they are older. Which is Mmmhmm?
This is what DH and I try to do. I don't know that I've ever lied to Babybartfast, even in a "making it age-appropriate" way (although chances are I have and don't remember when). However, answering in a NON-age-appropriate way can be a good way to shut down the Cycle Of Why:
Her: Mommy, why did that car just go in front of you?
Me: Maybe he didn't see the light.
Me: I guess he might not have been paying attention.
Me: Maybe he was doing something else, like checking his cell phone.
Me: Maybe he saw a text message come through.
Me: (getting bored with this) Because the light from inside the phone screen comes shooting out very fast through the air, and some of it went into his eyeballs. Inside your eye, you have two types of cells - rods and cones. The rods help you see outlines and black and white and movement, while the cones help you see colors. The cones have a narrower functional field of view, though. Here's how they work . . .
Voila, no more questions about the car who ran the light
As a bonus, sometimes she breaks out with trivia about rods and cones (or similar topics) and throws her preschool teachers for a loop