If you want your children to be honest, I think that they do need to see this role modelled in your own home; how else are they going to learn. For some questions, I believe that a child doesn't need to know the full story, and I will omit details rather than tell them a whole load of truths that they are not ready to hear. The grey areas for me, are things like Father Christmas, that we do have in our household. I grew up with Father Christmas and when I was old enough, my parents told me the truth. This never made me trust them less, or made me want to be dishonest, as it was explained in a good way to me.
Regarding lying to other people's children; this isn't something I would want to do, but I am aware of other families having different traditions and values than me and when I have been asked a question and put on the spot I have deferred to what I know the parents have told them. I don't think it is my place to lie to a child of a friend, but it's also not my place to go against whatever the parent has put in place.
With most things in life, there are grey areas, but if you want a child to be kind, honest, healthy etc, then they must see these things to become these things.