Sorry to jump in so late, but I've always been very open with my girls, and enjoy explaining things at their level. I hope it helps.
For what it's worth, we started out calling it "my -special- blood." I've explained to my daughters (my 6-year old noticed it a few years ago, right after I had my youngest), and asked about it. I explained that there is special blood inside Mommy's tummy, that helps to grow a baby. If there's no baby in there, I don't need it, so it just comes out, and every month my body makes more blood, just in case I want to have a baby (and that it doesn't hurt, because there's no "owie").
Also, if it helps, my oldest has asked about the various holes "down there." I've explained that one is for tee-tee, the one in the back is for poo-poo to come out, and the middle one is where the "special blood" and babies come out.
Best wishes and luck, and remember, always be honest, even when you're leaving out the gory details.