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.
Yes, I think it is OK to tell untruths to children when they are young only.
Sometimes they are too young to understand things -e.g. when my son died at a young age, some of the things we said to my 2 year old granddaughter were slightly not true, but as she would not have understood the real truth of some things, it was better for her to be told a slightly "different" version of the truth.
Having said that...because you are dealing with children, one can say something else, that will have a good outcome.
Also they should not be lied too, for giving false 'hope'...Adults need to think carefully before giving any serious answer.
Children are lead by our example. The old "do as I say not as I do" simply doesn't hold water. It is not what you say but what you do which impresses your children. Maybe the question should be "is it ok to lie?" and "are you comfortable with your children behaving that way?" Of course there are always exceptions to the rule, and the need to modify information to make it age appropriate as with all ethical dilemmas there are many facets to be considered.