Now the big question that DH and I try to avoid answering - "how does the sperm get to the egg?" It is hard to know how much detail they can handle at such a young age.
Yes, questions are relentless in our house!
This isn't as tough to deal with as you think - at age 3, my DD wanted to know how babies were made. We talked about sperm and egg, and how they join to make a special, unique person. She was really interested to know that no sperm or egg are exactly alike, which is why every person in the world is different. This satisfied her for awhile, until one day (shortly after she turned 4) she asked, "How do the sperm get to the egg inside the mommy?" So I talked about how boys and girls are different (she already knew the names for penis and vagina) and talked about how a grown-up man puts his penis into the grown-up woman's vagina and sperm comes out to find the egg. If they find each other, they make a baby that grows in the uterus. When the baby is born, it comes out through the vagina.
DD4 was FASCINATED by all of this, and consequently understands the concept and the correct information. I don't think it's bad to explain all of this to your child if they are asking - if they sense your discomfort, they will mistakenly believe that it's embarrassing or inappropriate to discuss. However, I do think the discussion needs to be child-directed - my youngest (almost 4) has never asked and I've never brought it up. But I do think it's important to start that dialogue as soon as the questions start - hopefully DD4 won't be embarrassed to discuss it if it's been an ongoing discussion since a young age. As a middle school teacher with 3 pregnant 13-year-olds in my class, I can say that I wish those girls' mothers had had an ongoing dialog with them.
As for giving her the information and worrying that now she'll be curious and want to try it someday, she's informed me that making babies doesn't sound like much fun (she doesn't like boys at this point!) and she has no desire to ever have children! In fact, the other night at dinner DH and I were discussing how these young girls were having babies, and DD4 piped up with, "Mom, that doesn't make sense - how do they get the sperm without a husband?" This opened up a dialog about our value system, which turned into great dinner table conversation. I am hoping this sort of thing sets the stage for ALL ideas to be discussed openly, into middle school and beyond.
During our Human Growth and Development Unit (I'm a science teacher) a couple of the pregnant girls in my class said they wished someone had explained it all to them six months ago. My class was the first time they'd heard the specifics about birth control. *sigh*
Kids need the right information, and they need it from their PARENTS. Part of the reason I'm so adamant about this is that, when I was 5, the older brother of a neighbor friend told us that girls get pregnant when the boy pees inside the girl. I spent the next couple of years being afraid to use the bathroom after my brother did, and when I finally got enough guts to ask my mother, she gave me some uncomfortable answer about how babies are made when a man and woman love each other very much - which made me picture some sort of existential occurance that I didn't understand. On some level, I knew she was sugar-coating it, and I didn't understand why she wouldn't answer my questions. I finally learned the truth in junior high from friends (sort of). I was ready to know at a young age - I was intellectually capable of handling it, and knowing would have satisfied my curiosity. I never was able to have a frank discussion with my mother about sex, even as an adult. I want my kids to feel safe asking me anything!