I tell them "I'm sorry, but I don't want to hear about this right now. I'm busy / have a headache / distracted / whatever. But if you would come back in 5 / 10 /15mins etc, I will happily listen to you then."
Or
"sorry, I understand you live skylanders / barbies / whatever; but whilst I am happy to here how well you are doing / you frustrations / whatever, I really don't understand or want to hear about all the tiny little details."

I kind of think honesty is important. Kids can get so swept up in their own little worlds, it is important for them to learn that 'yes' I am interested in and make time for 'them', but that they should choose how they are using that time better. Generally when my kids start rambling and I loose attention, and redirect them like that, they stop and think and tell me their important bits without all the extra 'fluff'. So it does seem to work for them.
((I have to do the same thing for my hubby too, when he starts talking computers / electronics / etc. although I am blunter with him. But really, I don't care about the processor or hard drive or 101 other components and which is better for what, etc. I don't need or want 'details', just give me the reasons in laymans terms without the boring unimportant 'fluff'.))

I do have one nephew who I find it extremely agonizing to be around because he just talks with absolutely no purpose about nothing all the time. He is a nice kid, and I feel bad, but he has absolutely no concept of social constructs and cannot at all read others body language. And he is so sensitive, and takes any kind of critism as a negative on himself, rather then people trying to help him. So you cannt just nicely explain to him about any of this, because he gets hurt at anything that isn't completely positive. He is draining to hang around, and it is such a shame, because I find myself actively avoiding him (and I know others do too) so that I don't get 'trapped' where the only way out it to hurt him.
With my nephew, it is part personality (and it is a trait that runs in DH's family), but it is also part upbringing (he is modeling the behaviours displayed by my MIL and my SIL - who are the two adults he sees most and they encourage him to matter incessantly.) it is even sadder because he has been and is bullied at school, and although I know it is never the victims 'fault', it is obvious to anyone who meets him that if he could just pick up on others body language better an social cues, he wouldn't struggle so much to fit in.
Sigh.