Answer:
I am a tale in childrens' minds. Though an illusion, I occur every night. I give them a fantasy, I give them a fright. What am I?
You use a knife to slice my head and weep beside me when I am dead.
I am known for my natural tuxedo and marching. What am I?
The more you take, the more you leave behind. What are they?
I'm white and I'm used for cutting and grinding. When I'm damaged people usually remove me. What am I?
Give it food and it will live, give it water and it will die.