1. We don't talk down to kids (although we talk as simply and clearly as possible). We tell them what they - and we - don't really understand, but which we know is true because God's word, the Bible, tells us so: for example, that God is a spirit (he's invisible, but he's real and he's everywhere); that he's the 'Trinity', one God in three persons; that he loved us enough to send his Son to die in our place ... And then, as they grow, they grow into our answers (but never to completely understand them, and that's good too).
2. Isn't it the same with lots of things we tell our kids? We tell them the world is round and wherever you stand on it, you're standing the right way up - something my 7 year old is completely confused about and asks me about all the time!!! We tell them many things we know are true and they (and we) don't fully understand. You don't need to completely understand something to know it and trust it, often because you trust the source it came from (which leads to my next answer...).
3. The very best answer for anyone is always one that takes them back to Jesus and the Bible, because that's where we want to direct our attention. In the end, we trust and serve God not because we understand him, but because we see him clearly in his Son (his life, death and resurrection) and in the Bible (his revealed word about himself). That's where all of us, Christian or non-Christian, adult or child, come to know and trust in God. Which is why we open the Bible with our kids and introduce them to Jesus, who is bigger than we will ever understand.
4. None of this would mean much without our example, as our friend from Tasmania wrote:
As preschoolers (my experience so far!) I think my kids realise that I believe God is real, so they do too. My two-year-old talks to God because I do. My four-year-old is excited that Jesus is alive because I am. They don't really understand - but of course I don't really understand either. He is someone we don't see, but who loves us. We talk about God because He is a part of our lives. And we answer their questions as best we can.5. Bec pointed out something I hadn't thought of before: not only do we set a good example for our children by our lives, but we embody truth for them. Kids learn in concrete ways. They learn about God's fatherhood as they experience human fatherhood. They learn about the marriage between Christ and the church as they observe our marriage. They learn about grace as they experience a relationship of grace with us.
6. In the end, as Gordon said, the problem isn't one of understanding (for we will never fully comprehend our great God) but of hearts that reject his truth. Only God's grace can open our children's hearts and help them to know and trust in him. So we lead our kids to God's word, we explain his truth to them, we live out our faith before them - but, most importantly, we pray for them.
Lots of helpful answers! Thanks, friends.