I found watching my nephews use my Kinect, that they can use it at first, but get frustrated very quickly when they get excited, they forget that there is a limited region that they have to stand in, that they have to make certain gestures etc.; the younger one wants to join in with his old brother and runs into the field of view and Kinect gets all confused.
So yes, young kids and use it at aged 2-3 but they really need to be 5+ to use it.
I did notice that in a recent video (the one with xbox reading the QR code) the user was very close to the connect (which was under the tv) but the on screen preview was showing a very wide field of very. Looking good for smaller rooms and small people.