Porky Pies

Exactly!

If anyone boasts that they can eat six rice cakes, I would offer them to them as a challenge!

In short, wing it, at usual!

What I'm trying to say is that the kind of things the OP mentions are not really important. They are tricks rather than dishonesty and should be treated as tricks. You can be tricked or you can call their bluff, and enjoy the fun.

So with the rice cake ine, you could just say thst in your house one or two rice cakes are allowed with morning milk. Or whatever.

No, you should appreciate the funny ones but let them know when you suspect what they say isn't true. At least, when it matters. Some lies don't matter and the typical trying it on ones don't really. With thsoe you just have to decide how far you'll carry the 'joke'.

It's a developmental stage: theory of mind. Sign of healthy child development.
Worried about the DGD now - should I encourage them to tell whoppers?

Mummy says I never have to read (pick up my toys, wash my hands, help clear the table) when I'm here

And

I never eat all my dinner at home and I always get pudding

It's a developmental stage: theory of mind. Sign of healthy child development.

My 9 year old DGD recently had her tonsils out and was quite poorly afterwards. As she started to feel a bit better she milked it for all she was worth. Her mother had to go away on business so was feeling doubly guilty and DGD was able to get toys off her.
I went to look after her and ended up saying 'You can have whatever you want today but make the most of it because it's not going to last'.

The DGD are fairly honest and upfront

However, DGS is the master of invention!!

On the other foot, our GDs went home and told their parents we had ' forced' them to watch Dr. Who. Since we never watch it and neither do they we were at a loss as to why?

Nice try boys, full marks for invention. Yes my grandchildren did all the usual things, we don't have to go to bed until 10pm, we can have sweets before meals, we don't need a bath every day etc. With my children it was always ' everybody else's parents let them- stay out until midnight, wear short skirts to school, go out with boys, have unlimited pocket money' .When they were older they said, yes you were strict but we know now it was because you cared. All was not in vain.