How 'bout language confusion:

I called Josh "chummy." Noah wanted to know what it meant and I said "friendly."
Later that day, Noah was calling Josh "chubby" and when Josh asked him to stop, Noah said "Mom says it means 'friendly.'" I tried to remind him that I said "chummy", but he keeps getting it confused, so don't be offended if Noah comments on your friendliness!

How funny Kristie!

Here's one I heard yesterday...
My co-worker was telling us that her 7 year old neice was telling on her 4 year old sister becuase she was being disrespectful to an adult.
The mother saw this as both an opportunity to correct and to teach, so she asked the 7 year old, "well, what do we call it when we don't respects our elders?" The 7 year old thought for a moment and said, "I know that; it's adultry"

We have 2 brown haired, brown eyed children and one blonde, blue eyed. When Jim was working at Best buy I took our new blonde baby in to show him off. One of Jim's co-workers said "Oh, a blonde baby, just like mommy." My daughter, who was five informed them quite loudly "my mom's hair isn't really blonde, she dyes it, All the time!"
She's precious isn't she?

When my nephew was 3 years old (he's almost 17 now), he was in the car with his mom and it was raining really hard. The windshield wipers weren't doing a good job. So, Drew asked his mom, Melissa, "What the h*** is wrong with those things?" My sister-in-law almost ran off the road.

Suzanne,

Since you've opened the floodgates on that end of "keep it clean," my parents say I was two when--with my grandmom over for dinner--after the prayer I looked down at my plate, disgusted, and asked, "What the h*** is THIS?"

Have you seen Nicole's list of Katie quips?

I had a child (who was the sweetest, cutest, nicest one in my class) in my first year of teaching first grade come up to me with a pamphlet to go home and ask, "What the h*** is this?" After I put my eyes back in my head and picked my mouth off the floor, I told her what it was and nicely corrected her saying that that word is not one we should use in school.

My little friend Sarah was overheard singing a Mark Altrogge Scripture memory song, "It is to a man's glory to overlook elephants (instead of an offense)."

Memorizing Psalm 100-
.."It is he who made us, we are KIDS..." (Instead of "His") Isn't it the greatest thing in the world to be "Kids?"
They could say the whole Psalm, and the kids part always flowed with it.