I am now solely responsible for my MIL after the death of my husband (her only child) last December. I am also 4,000 miles away from her, just to complicate matters.
I have needed to 'let things' go' when she says something that isn't true, but it's hard for me not to gently remind her that her son has gone when she asks to speak to him.
Fortunately, she remembers and although she's sad, she realizes her confusion and is often calmer for it.
I know, in general. we're supposed to let them have their reality, but sometimes it works to explain that they may have forgotten something or that we all get confused from time to time.
Obviously it's on an individual basis, but the gentle reminder helps my MIL in some situations.