I have attempted this with my daughter. "Is Father Christmas real?" "Yes!" "How do you know?" "Because [best friend] saw him!" "How do you know [best friend] is right?" "'Cos she is!" At this point I had exhausted a 5yo's philosophical introspection.
First, I got a more instrumental response from a 7yo on whether the tooth fairy is real: "As long as I find my dollar under the pillow, she is!"
Second, you were using an adult language with a small child. Asking instead what her friend saw in more detail, and discussing that instead could have been more illuminating. Or not.
If it's worth saying, but not worth its own post (even in Discussion), then it goes here.