I was told that in the early stages of dementia, it's good to challenge their unrealistic beliefs, but in the later stages its best to go along with them.

Middle and late stage dementia patients are basically in a constant state of confusion. The human mind can't handle being confused all the time, so it will make up stories that make their world make sense. Once they're at that stage, it's kinder to just let them live in that world, rather than pulling them back into confusion.

When my mom used to take my grandfather with dementia out to lunch, he would always insist that he'd been to that restaurant before, even if he hadn't. It was his way of convincing himself something was familiar, limiting that perpetual confusion.