Praise be to Allah.
It is not permissible to uncover the ‘awrah in front of children who have reached the age of discernment, because Allaah has commanded the believers to tell household members who have not reached the age of puberty to ask for permission before entering at the three times, as He says (interpretation of the meaning):
“O you who believe! Let your slaves and slave‑girls, and those among you who have not come to the age of puberty ask your permission (before they come to your presence) on three occasions: before Fajr (morning) Salaah (prayer), and while you put off your clothes for the noonday (rest), and after the ‘Isha’ (night) Salaah (prayer). (These) three times are of privacy for you; other than these times there is no sin on you or on them to move about, attending to each other. Thus Allaah makes clear the Ayaat (the Verses of this Qur’aan, showing proofs for the legal aspects of permission for visits) to you. And Allaah is All‑Knowing, All‑Wise”
These times when Allaah has enjoined us to tell children to seek permission are times when people wear fewer clothes.
The great scholar Ibn ‘Ashoor (may Allaah have mercy on him) said in his tafseer al-Tahreer wa’l-Tanweer (exegesis): These times are times when household members would wear fewer clothes, and it would be reprehensible for their children to see their ‘awrahs, because that would leave an impression on the child’s mind, as he would not be used to seeing it. And because children should be brought up to cover their ‘awrahs so that that will be like second nature to them when they grow up. End quote.
This is the proper etiquette with children: they should be prevented from seeing people’s ‘awrahs, because of the negative effects that will have on their attitude when they grow up.
The great scholar Ibn Sa’di (may Allaah have mercy on him) said in his Tafseer, when listing the lessons learned from this verse: … it is not permissible to allow a small child who is below the age of puberty to see the ‘awrah, and it is not permissible for his ‘awrah to be seen, because Allaah has only commanded them to seek permission so as to avoid something that is not permissible. End quote. This applies to a child who has reached the age of discernment and understands what the‘awrah is.
The great scholar Abu Bakr al-Jassaas said in Ahkaam al-Qur’aan (3/464-465): Allaah has enjoined the child who understands about women’s ‘awrahs to seek permission to enter at the three times, in the words “Let your slaves and slave‑girls, and those among you who have not come to the age of puberty ask your permission (before they come to your presence)…”
What is meant is the one who understands that and sees women’s ‘awrahs. The one who is not commanded to seek permission is younger than that. End quote.
If a child has not reached the age of discernment, there is nothing wrong with not covering before him. Ibn Qudaamah said in al-Mughni (7/76): As for the boy, if he is still a small child and has not reached the age of discernment, it is not obligatory to cover before him. End quote.
The great scholar Zakariya al-Ansaari said in Sharh al-Bahjah (4/98): It is permissible to uncover the ‘awrah before a small child who cannot tell others of what he has seen. End quote.
This is a good guideline. It is permissible to uncover the ‘awrah before a small child who cannot tell others of what he has seen, such as a child who is one or one and a half years old. But it is not permissible to uncover it in front of a child who can tell others of what he has seen, such as a child who is three years old. But it should be noted that this may vary from one child to another. Some children are more advanced than their peers in mental and linguistic development, and some lag behind their peers.
And Allaah knows best.