Here's the cast teaching Big Bird what death means, and it'll break your heart about fifty times in one viewing. I'm not sure what's the best way to talk to kids about death, but this seems like a pretty good start.
I like that they didn't use any euphemisms. Dead is dead. I'm not sure why people started saying things like - gone to be with Jesus or up in heaven, or passed away. I especially dislike using the word "passed" without any qualifiers. Passed what? Their death exam. I suppose it's because dead sounds so harsh. But, particularly with children, being calm, clear and concise is the best way to approach most things - including death.