Praise be to Allah.
It is very beneficial for the parents to show interest in their children’s questions, regardless of what the parents really think of these questions, then they should not behave as if these questions are causing some sort of embarrassment to them, so that the child will not develop some kind of sensitivity regarding some issues that he is asking about.
With regard to the question mentioned here, the mother could refer in her answer to Allah the Creator and His might, and how He can bring forth the living from the dead, and bring forth the dead from the living; how Allah created Adam from dust, then created his offspring and children after that in the bellies of their mothers; and how the might of Allah, may He be exalted, is manifested in making the belly, even though it contains what it contains, a suitable place for the foetus to live in for a while; and that the foetus goes through stages from a nutfah (sperm drop) to a ‘alaqah (blood clot) to a mudghah (chewed piece of flesh), shaped and unshaped.
Thus the mother will shift the conversation to speaking of Allah’s might, His power of creation, His care, His wisdom and how He guarantees provision to the foetus in its mother’s belly, even though this foetus is powerless and its mother has no control at all over its provision. And the mother can speak of how Allah has allocated a particular length of time for the foetus to remain in the mother’s belly, then by His might He brings the baby forth from his mother’s belly, as He brings forth the chick from the egg.
Similarly, the mother could answer her child’s question, at this age, by giving general answers so that the child will be able to understand what he hears, and it will undoubtedly be correct information. It is good to support the answer with appropriate verses from the Holy Qur’an, so as to shift the conversation to a different category altogether, and spare the mother from having to give blunt, embarrassing and sensitive answers, and also to avoid giving incorrect information.
And Allah knows best.