here's a responce from another mom, on another website back in 2008:
"Well, if you would have asked me how I would PLAN to tell my 3 1/2 year old and how I actually DID.... It would be two different stories. My 3 year old son asks SO MANY QUESTIONS... And after I answer it, he has a question about that... and so on and so forth. So after trying to gently dodge the question, I just blurted it out. It was something very close to this once it got started....
ME "Mommy will push the baby out"
SON "From where"
ME "Mommy has a special place where the baby comes out. Like this (and I simulated a very clean looking fake push" and just pointed to that area.)
I was inwardly mortified ;-)
So to my great surprise he said "oh" and then "Where is the baby now?"
I said "In mommy's belly"
So then I went on to explain that when God gives us a baby - he gives it a special place in my belly to grow and I went into basic detail about how it starts "this big" and kind of faked an explanation how it gets bigger and bigger... how it has to grow up, arms grow, gets hair, nose gets bigger, gets all 10 fingers & toes....until it's ready to come out.
Then I said when it's time for the baby to come, mommy gets a big tummy ache and that's when mommy knows it's time for the baby to come. I said it hurts a little - but not too bad. I told him that mommy will have contractions and gave an exagerated squeeze on my belly that made him laugh and said each contractions makes the baby move down farther until it's about here (and I pointed to the lowest part of my belly.... and when it's down far enough, mommy pushes it out.
He was very satisfied with the explanation and didn't ask any more questions.
I did follow it up (because he's a little boy) with that the baby comes out gooooooopy and we had a fun laugh over that. But seriously... the more I just give my son straight answers whether it's about how a clock works, how birth happens or why it rains... he is satisfied and soaks it in. I can't believe how much information kids retain! I think there is an age of innocense where they don't process things with the knowledge & imagry that we have and it's not embarassing for them as it might be for us.
The one draw back is now he will say sometimes "Mommy... are you going to push the baby out today?" in front of somebody and I wonder what they think... :-)
Good luck finding the right solution to your question... I hope you find something that works well for you."