I have 3 kids and have been playing RPG's with them since they were four years old. There are certain things I've learned, such as:

Explain RPG's as "it's like make-believe, only with rules"
Have a tendency to say "yes" over "no". Such as when my players wanted to spike the evil merchant's drink with both a love potion and a fart potion.
Don't be a stickler for rules. Let them be a princess even if the rules say you can't (D&D 3.5).
Don't kill their characters if they're really young.
Be like Mary Poppins, kind but firm: "Sorry, no dragon characters. You can either play one of these races, or you can play with that dragon figure over there."
Don't expect them to know, or want to learn the rules.
Keep it G, or at least PG or PG-13 (depending on age).
Use simple rules, such as our lightweight Easy 20 RPG

For Scabard community ideas on this topic, check out the many community comments on my Facebook post on playing RPG's with kids.

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