I think little children have God's holy spirit in them....and as they become older, it wanes if they don't have Jesus in their lives. According to the bible, when Adam and Eve ate the fruit of the 'knowledge of good and evil' tree , all mankind there after became aware of Good and Evil. Now, I think when the bible refers to 'Knowledge of Good and Evil' in genesis, it's referring to a tree that reveals the knowledge about an evil realm (i.e. the world of the devil and his demons) and the good realm (i.e. the world of God, Jesus and the angels). I don't think that children know about the evil realm, but they surely know about the good realm because we can see an amazing innocence that comes from God in them...and also, children can tell evil people from good people...for instance when an evil person comes in to the room, they start crying or become uneasy...and when a good person comes into the room, they become friendly, playful and happy...I guess they are that close to God, that they can tell the difference between evil spirits and 'holy' spirits.