I recently have been studying to work as a caregiver for children and I took government courses that are required by everyone where I live. So when it came to your question on how to help the child, I have some information to share from what I studied. Ultimately it will be good to look for some direct support from people in your environment, government, superiors or someone else with direct experience. I have only studied as a student and have not yet personally needed to direct such a situation.
So there was one part of my course that covered identifying signs of sexual abuse. So thats one thing you have to look out for. The other thing is, yes, that children will explore their genitals. I have a document that gives some tips on how to direct the child. This is the link where you can download the complete document, but I also copy and pasted below just the section that addresses sexual play. https://drive.google.com/file/d/0B7Aj5V ... sp=sharing
7. Engaging in Sex Play
Teach children about their private zones, and the difference between good touches and bad touches. Encourage them to be assertive when someone touches them in a manner which makes them feel uncomfortable. Ensure that children are well supervised at all times. Allow children to ask questions openly so that sexual curiosity does not become a “dirty” or hidden subject.
Child has a natural curiosity in own body or the body of others. Child knows that it is not acceptable, but is not sure why touching feels good. In some cases, sex play can be an indicator of possible sexual abuse.
Preschoolers are naturally curious about the world around them, including their own bodies and the bodies of others. They are beginning to build their self-concept, and this includes knowing about their gender. Masturbating is a pleasurable experience in which young children typically engage, sometimes simply in order to comfort themselves. Teachers need to recognize the difference between developmentally appropriate exploration and the signs of potential sexual abuse. Simulating intercourse or other adult behaviors may be some of these signs. Also, if the child is reflecting more knowledge about sex than a young child should have, consider the possibility of sexual abuse.
Redirect to another activity while remaining calm. If sex play is between two or more children, an incident report should be filled out. Be certain to maintain confidentiality in filling out the report. If there is a suspicion of sexual abuse, report it immediately to the Child Abuse Hotline! 1-800-962-2873 (1-800-96-ABUSE)
“Let’s find something else to do.”
Make the child feel guilty or ashamed. Overreact. Fail to report suspected cases of child abuse.
Besides this you also raised some questions about what's going on inside the mind of a child during them masturbating, and also you described your own mind points.
So, all imagination, thoughts, emotions and feelings are deceptions. The patterns and structure of the mind is explained in the desteni material. Where energy is drawn from the body to create mind programs which we live and become. It is possible to walk out of the mind and into the physical body. This means that its possible to be physical during sex and masturbation, where there is no thought or being separate from the body. There is over 20 interviews on eqafe that describe how to use masturbation to support you to move out of your mind and into your body. This will require though stopping your mind. They are very cheap only 1 euro each. https://eqafe.com/p/shocking-secrets-of ... troduction
The first is free.
Is this response supportive? Did I miss anything?