I think we can assume that no one would suggest that an education omit facts entirely (hence, 'early'). I also agree that a fact-focused early education would be beneficial. The question raised by your quote is whether it would be beneficial to largely or entirely omit fancy. I do think that's a tough empirical question, though that's the kind of thing where empirical answers are not likely to be forthcoming.

Clearly, education in biology, mathematics, and the like should be factual. No one would argue with that. So what sort of thing are we talking about? What is the subject matter for which someone would even suggest fiction as a mode of education?

My guess is that we're talking about something like moral education. I can't think of any alternatives, anyway (other than education in the history of literature, but that suggestion would be question begging). Can we think of another way to provide a moral education that omits fiction?

Well we could certainly teach moral philosophy (though where that lies on the fact-fiction axis I don't know) rather than literature. There we have another empirical question, though my experience has been that moral philosophy doesn't go over very well with the very young. Tends to do more harm than good. Do you have a suggestion here?

One alternative (the alternative that Gradgrind had in mind, I think) is to omit moral education entirely. I take it Dickens' thought was that this is the sort of thing you wouldn't need if you were educating slaves in more sophisticated forms of labor, because their behavior is managed externally and they don't need to give any thought to how to live their own lives. That's my impression, anyway.