Children, especially toddlers, have this raw truth. I find having a sense of humor helpful. The other day my lovely DD announced loudly that the man who was walking past us was really huge. I could have hushed her but she wasn't lying... just verbally observing. The gentleman the comment was directed at was wonderful. He answered back with yes he is and sat down at the table behind us and had a lovely conversation with my DD. At one point he asked her age and she quickly responded 3 1/2 which shocked him because of her verbal ability. When we left she had to run over and give him a hug. Sometimes those awkward moments turn into something magical.