If your 3 yr old tells you there's a monster in their room early in the day, do you dismiss what they're seeing or feed into it asking them to describe what it is they saw?

Don't dismiss their fears! It may seem silly to us, but to them, it is a real fear. Perhaps you could go into the room together with him to see where the Monster is hiding. Once when I was in Primary school, there was a rumour about ghosts lurking in the eco-garden. Our lovely Principal was a kindly old gentleman who rallied us and took us on a walk through the eco-garden to make sure there were no (more) ghosts.