Sexuality development that starts at this age is crucial in the development of the future personality of the child.
As with everything, children are fascinated with their genitals. This is the age where you start toilet training your toddler, so moving out of diapers and coming into contact with the genitals will be an extremely intriguing experience. You will observe that your child may be constantly asking you questions related to the genitals. They may also keep fondling their genitals a lot. Though this may be embarrassing, especially in front of guests, keep in mind that this is perfectly normal at this stage.
Children touch themselves out of curiosity and for physical comfort. If your child is fondling his genitals a lot, it may be a sign of emotional or sexual trauma too.
The way you handle your child's obsession with his genitals is extremely crucial too. You should be careful not to stigmatize him or make him feel ashamed of himself for doing something 'wrong'.
By the time he is over 2 years of age, the curiosity regarding other people's genitals also increases. The fact that the genitals are always covered adds to their curiosity levels. You may now find your child 'peeking' a lot. This is the right time to teach him about privacy. Also, let him know that his genital parts are not for public viewing, as are others' genitals.
Curiosity regarding genitals may extend to other kids too. Your kid will want to know if his genitals are something unique to him or if all other kids have them too. So it is not unusual to find your kids playing Doctor-Doctor. It is important that activities like "I'll show you mine, if you show me yours" or other forms of exploratory play are consensual and a child is not being forced or coerced into activities she or he is not comfortable with. Significant age discrepancies between children may create a situation where one child is being manipulated or exploited by another. This is also the right time to teach your child about Good Touch and Bad Touch.