Childhood Development and Sexual Behavior

To parents of infants and toddlers, their children's sexual development may seem a long way off. But actually, sexual development begins in a child's very first years. Infants, toddlers, preschoolers, and young school-aged kids develop an emotional and physical foundation for sexuality in many subtle ways as they grow.
Just as they reach important physical and emotional milestones, like learning to walk or recognize mom and dad, young kids hit important milestones in how they recognize, experience, and feel about their bodies, and how they form attachments to others. The attachments established in these early years help set the stage for bonding and intimacy down the line. Babies' earliest emotional attachments are formed with their parents through physical contact that expresses their love. Being held and touched, kissed and hugged, snuggled and tickled allows babies to experience comforting, positive physical sensations associated with being loved.
The unique type of physical intimacy and emotional attachment between parent and infant can be the early foundation of more mature forms of physical intimacy and love that develop later as part of mature sexuality.
As kids continue to understand and experience their bodies, and the physical changes of puberty emerge, your attitude and acceptance will continue to play an important role in their healthy development.
As kids mature sexually, they're often both excited and scared about growing up — especially when they notice hair growing in new places, get their periods, or start having wet dreams. They spend a lot of time wondering if they're "normal" and comparing themselves with their friends. Kids — especially early and late bloomers — need lots of reassurance as they head into this uncharted territory.
Puberty can be a very confusing time, with lots of physical and emotional changes, and kids need to know what to expect in the months and years ahead, even if they're too shy to ask.
By being open to your young child's questions about bodies, babies, love, and sex, you set the stage for continued conversations and openness when puberty begins. Welcoming the questions about your child's changing body and sexual issues — and not treating them as dirty or embarrassing subjects — will help foster a healthy sense of self-acceptance in your child. It also makes it more likely your child will use you as a resource for information and guidance.

Reference
http://kidshealth.org/parent/growth/sexual_health/development.html#