I split the difference by giving them a material advantage. The real world is full of those so your parents can approve. When the kid with their 16 pieces can beat me with 4, next game I get 5. They know the game is rigged in their favor so their is no BS ego inflation, but they sometimes get a little taste of victory. If they get cocky I'll say "oh, so I get two more next game?" or something along those lines to further keep that in check. This is also pretty good for me since it forces me to think harder, run faster/further, sword fight multiple tiny people at once, etc...

ooc how normal is it to allow a child / younger sibling to win a game?

It's normal.

I figure that folks who play a competitive game with friends with any regularity either know they have to agree to some kind of appropriate handicap for the more advanced player(s) - or just don't realize that their regular match mates are doing it for them in some way less formal way.

Lucking into a perfectly matched opponent, who stays perfectly matched, happens, but is vanishingly rare.

An appropriate handicap is by far the best way to attract new players to a game. Modern games have built-in rules that explicitly acknowledge new-player mechanics, but older games tend to just have informal traditions for it.

Since I love to play games with folks, I often apply all of my skill to strategically coming in second place, with as close of a margin as possible.

People who notice me doing it don't tend to mind, but do usually try to punish me for it by destroying that narrow margin I'm trying to achieve. In the end, we still end up fully competing with all of each of our skills applied, which is great fun.

It sort of depends what you mean by letting them win the game. I dont think its ever good to let an opponent win if you are evenly matched or relatively close to it. Its deceptive and dishonest, and if the other person finds out, they likely will feel negatively about it.

On the other hand, I did just let my 6 year old win a game of magic the gathering, but he cant comprehend the cards and all of the different mechanics, so I dumbed down my play to match his. He beat me pretending to be a 6 year old, essentially. I think that's fair, and he's simply not capable of understanding the bigger picture, but I'd still like to play with him and he's still learning the game as he goes.

There's a lot of different ways to do it. Some people never let the kid win (but unless you're a master, they will win sooner rather than later if they train. Kids are monsters in chess). Some people flip the board when the kid makes a mistake and ask the kid to see how to take advantage of the move they just played. Some people let the kid win once in a while.