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Don't deny the problem exists: it does no good! If you explain to a child that monsters don't exist, they'll only come back with: "Of course I know that they don't exist but the monsters don't know they don't exist!"
And there you have it in a nutshell: knowing something is one thing, but overcoming it is something quite different.
Speak openly and explain what's happening: "Your fear does exist but the monsters don't exist. They're created by your imagination."
Ask your child to describe as specifically as possible the reasons for the fear: what are they scared of? Are they worried about getting lost? Are they afraid of baddies and monsters? If you think it's necessary, get your child to sketch out the scary figures.
Once the nature of the fear has been identified, tell your child that the both of you are going to do what you have to to make the fear go away.