Everyone lies sometime. There are many reasons to lie. Sometimes it is to not hurt someone's feelings. Sometimes a lie is for our own advantage. Some people lie in conducting business and in their personal lives.
Most adults are aware of when they lie.
Young children sometimes have problems telling fantasy from reality. He may not even be aware that it is a lie. Children with good imaginations often take longer to learn what a lie really is. It is important to work with children to teach them about fantasy and reality, instead of punishing them for these kinds of beliefs. A pathological liar believes in the lies, at least at the time that she or he is talking.