My grandfather has always had dentures since I can remember and a good friend of mine is missing quite a few teeth. I tell my boys, ages 4 and 5 the truth...in kid terms.
We have to take care of our gums and teeth or else they will fall out. We have to brush our teeth and gums everyday or they will get an "ouchee", get loose and fall out. Sometimes our gums bleed when they are not healthy. Sometimes our teeth will have yellow or brown when they are dirty. Sometimes our teeth look brown or black when they are rotten. If we do not brush and go to the dentist to take care of our teeth, then our gums and bones can be infected and make us really sick. Sometimes people get sick and even when they brush they may get a sickness in their mouth and they need surgery to fix their teeth, gums or bones in their mouth.
Every once in a while my 5 year old will try to look in my friends mouth. Sometimes the boys just do silly things like play with your hair or touch your face. I tell them not to do that because it hurts my friend's feelings. Our friend feels bad that his teeth are not a healthy and pretty as ours, so we don't want him to feel bad. I tell them to say sorry and encourage them to ask questions. If the person doesn't want to answer, then they have that option.
It's really just a health issue like a heart defect or broken leg. Things happen in life and not everyone has enough money or insurance to fix things as we would like. Other people just don't care. I tell my kids that it doesn't matter how our friend's teeth look because he's still a good person and fun to hang out with. Looks really do not matter so much.
(Unfortunately, some of this back fired on me...lol. My 5 year old has lost several teeth and the tooth fairy has visited. My 4 year old now tells me that he doesn't want to brush his teeth anymore. He wants his teeth to fall out, so the tooth fairy will bring him candy. I asked him why he thought the tooth fairy would bring him candy because she's always brought money from what I remember. He said, "I want candy!" How funny is that? He actually pieced all that together. Then he told me that the tooth fairy will bring him candy instead of money!)