Children exhibit a range of sexualized behaviors; it is part of their development. Psychosexual development begins in infancy and early childhood with an interest in exploring one's own body then, during latency, moves to a curiosity about the bodies of others.
Some typical sexualized behaviors include: touching one's own body; rubbing against something; exposing self to others; voyeurism; looking at nude pictures; using sexual language; making sexual sounds; imitating sexual behavior with dolls; experimenting with other children through sexualized games that include kissing and fondling; etc. Instances of sexual exploration are often spontaneous and are experienced as emotionally positive and sometimes "silly." These behaviors tend to be linked to feelings of connection and attachment and they lack the erotic quality found in adult sexual behavior.
Though these are fairly common and typical child behaviors, some sexualized behavior in children can be concerning. If children exhibit shame, guilt, fear or anxiety or are preoccupied with sexual acts, there might be something else going on for them. Another concern is when children are experimenting with others where there is a significant difference in the children's age (more than a year or so), strength, and power and/or the other child is uncomfortable. Coercion, bribery, manipulation, threats, and sexual behaviors directed toward adults are other indicators of potentially problematic sexual development.
It is important for parents to think about how they experience the behaviors of their children; if the behaviors feel atypical or not quite right, that might signal an issue of concern, either in the child or the parent/child relationship. If this is the case, it is definitely worth seeking professional guidance and support.
Children develop sexually. Understanding the typical behaviors of children and responding in a calm, supportive, nurturing way (e.g., acknowledging their behaviors and feelings, setting limits where needed, etc.) helps instill appropriate boundaries and teaches children about healthy sexuality. It also helps parents know when there might be a problem.
Sources:
Normal Behavior versus Abuse: Juvenile Sexualized Behavior
Childhood Sexuality: Discerning Healthy from Abnormal Sexual Behaviors