What may seem to be shocking language was actually extremely refreshing and funny. The fact that someone had gone their whole life without any hesitation when using such words was just brilliant. No offence intended so no offence taken.
Children are the only people that actually say what they think. When they demonstrate their refreshingly inquisitive nature by asking questions about the unusual things they see, it should be an opportunity to educate and inform them, not silence or punish, regardless of how embarrassed the parent may initially feel!