I grew up in a family of "kidders". It was simply one more way of showing our affection for one another. But it must be done affectionately. Absolute care should be taken not only to not cross the line, but to not get anywhere near the line which separates kidding from being cruel.
Not if it's in a condescending way. Some parents can tease their children in a fun and loving kind of way and usually ends it with laughter and hugs along with a ruffling of their hair. All walk away with with their confidence in tact. If it's done in a hurtful or embarrassing way and it brings the child's confidence and self esteem down, it can stay with that child for a long time.