Kids believe all sorts of shit. If it's not causing dysfunction in their life, there's probably no harm in letting them be a weirdo until they either grow out of it or become a based weirdo adult.
I've known teenagers calling themselves otherkin. I've never known a grown adult to. It doesn't seem like sexuality or gender where it's here for the long haul - just keep being a cool parent and let kids be kids and let them be little a cringe sometimes, as a treat. You can all laugh about it when you're old.