Do children in your games talk about inappropriate things like this? Or is this a symptom of falling moral standards in Veronaville and my other neighbourhoods? How should parents react?

Discuss.

Children are curious, so I'm not at all surprised. RL kids ask where babies come from and all that (often at the most inappropriate times). Sim kids likely have similar questions. They'll also react with shock if walking in on someone woohooing, and if so, no wonder they have questions. It's possible it's part of a joke or gossip or some such, too.

I had a similar situation in my game recently, where a little boy's father was particularly loose lipped at the dinner table, and he proceeded to tell his school friend all about it as they were playing outside. I found it funnily accurate, these little children talking about things they don't really understand out of earshot and probably getting a lot of stuff wrong.

Oh, goodness, yes! I've seen kids talking to their parent and other adults about sex. I don't know if it's curiosity or just bad manners, but the adults don't freak out over it.

Personally I think it's immoral not to talk about sex with children as if it's just another part of life that will affect them when they're older. The secrecy and shame around woohoo education IRL makes life so much easier on abusers and predators, and so much harder on kids figuring out their sexuality. I bet if the adults around you had been more open, AndrewGloria, you wouldn't have been an elder and needed the assistance of a game to figure out your own!

Are there any memory topics actually excluded from discussion? I remember on my early years of school kids would boast with their knowledge of taboo subjects. In retrospect they were not always accurate, but the leaders got to have their way desribing what certain naughty word meant.

@AndrewGloria I think it's a sign that the Sims in your neighborhood are just really open about this part of their lives, and the children feel safe and comfortable bringing it up as a conversational topic so that they can learn and have healthy relationships when they get older. The foundation of a healthy relationship is communication after all.

Yes sims are comfortable with talking about woohoo and death

They are also comfortable about congratulating someone else over something of a third party they both dislike/hate. Often when someone congratulates another it pulls up a third sim’s memory.

@AndrewGloria, I think it's a sign of healthy parenting at play with sim kids being comfortable to discuss woohoo openly. The parents can explain that it's a natural occurrence and as they age the definition of woohoo can be described in more detail such as making love. But for a young child, it's natural as others said for them to be curious. It's the perfect time to answer any of their questions, explain consent, and how important it is that they aren't treating it as a dirty secret.

It happens. I think it's pretty amusing. I mean this is a game when your sim can have public woohoo in a restaurant ... and the parents (who just happen to be dining out) will run up and cheer!

"I asked my mom where I came from last night...."

I think it's random and not related to gameplay. I don't find it weird, kids have the darnedest playground conversations. I'm pretty sure that kids in late childhood also know the basics of where babies come from.

I asked my mom what "making love" meant and she did not want to tell me lol

Okay that last post reminded me that I, IRL, learned roughly what "sex" means because of sims.
Back when I was a wee lass playing sims 1 on my mom's computer, "Woohoo" was called "Play in Bed". I didn't know what it was, really, just that married couples did it and it could result in a baby.
Well one day, instead of "Play in Bed", the option said "Have SEX!". I asked my mom what that meant and she just goes "Oh it's the same as 'play in bed'."
So my very first shaky definition of "sex" was "thing couples do in bed together, fully under the covers, wriggling around and making weird noises, possibly fireworks???? and it can make a baby, but that bit might just be a sims thing, it seems pretty rare in the game".
(I didn't actually have my sims 1 sims "play in bed" very often. When I wanted a baby I just bought one. There were no genetics back then so it didn't really matter anyway.)