I gather from the various reading blogs out there that this is Fairy Tale Fortnight. Not too long ago I read a collection of fairy tale-inspired stories called "My Mother She Killed Me, My Father He Ate Me" (it's mostly awesome) and noticed to my surprise that the introduction made no mention of Bruno Bettelheim. Bettelheim's 1976 book "The Uses of Enchantment" is a major, and very beautiful, examination of the psychology of fairy tales.
Bettelheim's reputation has suffered because at some point he advanced theories on the genesis of autism that were grossly unfair to the parents, and especially mothers, of autistic children. But that doesn't make "Uses" any less great.
Anyway, his theory of fairy tales is more or less that, by reading or telling them to children, we give them implicit permission to own their darker feelings. Mother figures especially split in fairy tales: a kind, loving, sometimes magical mother on the one hand, a witch or evil stepmother on the other. By reading these stories to our children we let them know that it's okay to see us as a little of both, and that nothing terrible will happen to them because they have hostile impulses as well as loving ones.
The Dark Woods are there inside all of us, but the fact that we have to journey through them never yet stopped a fairy tale protagonist from completing his or her quest or from finding true love in the end. Fairy tales give us permission to go exploring in those dark woods, and confidence that whatever adventures befall us there we will someday emerge unscathed.
Of course, this isn't just true of fairy tales. I believe that one of the most important functions of literature is the way that it offers us implicit permission to feel things we might normally try to censor out of our inner lives. I'd guess this is the reason for the popularity of the "Twilight" books, for example: in a culture that often regards love as a kind of commodity, that thinks relationships should be subject to a careful cost/benefit analysis, they gave readers permission to love recklessly and without thought of the consequences.