If you discover that your child and a friend or sibling are involved in sexual play, it can take you by surprise. Try not to act shocked. Calmly, let your child know that it is not OK to show people his genitals, or to touch other people's genitals. Use this as an opportunity to discuss the differences between the bodies of boys and girls. Allow your child the pleasure of exploring his own body.
Toddlers like to touch themselves as they bathe and get their diaper changed.
Many are happiest when they are running around completely naked. Let your little one know that you understand it feels good to touch himself, but this is something for him to do in private. Young children are especially good at reading our body language and facial expression. Be careful that you aren't saying one thing, while your body is saying another. We are all sexual creatures from birth.