told ds#1 that the characters had so many people to talk to that they would lose their voices if they spoke to each child. Since I have a boy, he's not that interested in the "people" characters (most of which are princesses anyway) so I had quite a while before I had any additional questions.
Now ds#1 is almost 8 and has known that there are people in the costumes for quite a while, but still enjoys it. I now remind him not to spoil it for his brother, who is only 3 and still believes. After a while, they all figure it out. Some lose interest then, others keep the magic for years afterwards.
Good luck.