Bless him, asking if you were okay! :-)

And I think you're quite right that it does children a disservice to assume they're oblivious to plot holes. From my experience with my niece (four years old), she's working very hard to understand what she's seeing all through any on-screen story, and is very ready to ask all the questions she needs to make sense of it. Sometimes, she's just confused because she isn't yet familiar with narrative conventions (e.g. she really struggled with flash-backs in the last film we watched together), but sometimes her questions are absolutely spot-on.