Do you think false confidence is ever needed?

In raising my children, I was sometime criticized for being to honest about their actual achievements. I applauded all their strengths both big and small but I would never tell them something was right if I felt they should have the skills they needed to achieve them.
Even when playing games, I wouldn’t throw the game to make them happy. I would simply point out that I have better skills from practice.
If they tried to give up, I would let them know that the game would be off limits forever if they could not stick it out. As a result they got better and of course won, fair and square.
I always felt it was a good lesson to teach them four things.
1. Life isn’t going to hand you everything you want.
2. You have to earn your way through life.
3. The only way to really win, is to sometimes struggle to you get things right.
4. Theres no guarantees that hard work will always pay off but if you give up when its tough you’ll never learn you can do it better.

I bring this up because I, notice children are getting more and more awards these days for very little. Aren’t we setting up children for failure once they realize that the real awards require real work and struggle, sacrifice and tenacity?
And the ones that really work hard are being sent the message that their work equals lame work so why bother to work hard?