Well, I can tell you that my mum sometimes seems to be made out of fireworks (and nails!)! She's always been what we call "feisty" and that has certainly become magnified. I think she lashes out when she is confused and scared. Some of the social niceties that stop us behaving how we want to can disappear. However, there are also times when mum can be sweeter than she has ever been, almost as you say childlike. As for lies, the person with dementia will probably believe absolutely what they are saying and there is little point in arguing because you won't win and it will just cause upset. You learn to tell a lot of kind lies yourself.
Yes, a good show can be put on and we call that "hostess mode". This can be particularly frustrating when you are trying to convince other family members or health professionals that there is something wrong!
When is it time for a care home? In general, I would say when the person can't be kept safe at home any more, or if they are agitated or lonely when nobody is there. It depends on the person really. Several people have said that they chose a care home early on so that the person with dementia was able to enjoy the company and activities while they were able. Other members will be along with their thoughts. My little ramble won't have covered everything!
Do you have any help looking after your mum?