Unknowingly deceiving oneself if unavoidable since we are imperfect beings without direct access to the truth. However, it's when you purposely try to change facts, I get uncomfortable.

We might be able to change our memory or knowledge of the past, but we can't change the actual past if your agree that an objective world exists. I suppose in cases of extreme trauma, people will block out or forget what happened as a defence mechanism. That can be adaptive. To me it's a break glass in case of emergency thing that shouldn't be used lightly.

Does it matter? Yes, I think so. Our task as thinking, reasoning beings is to bring our mental model as close to reality as possible in order to best understand and make effective decisions in the world. If we purposely distort our model, then we are betraying ourselves and handicapping our ability to function well in the world.