Cool article. I think there's something naturally very appealing about making things with your hands. As a kid I found it really empowering because I thought of wood products as something which came from mystical factories, and now I could make them myself!
That said, 5 years old seems really young to be whittling without supervision? I still managed to cut myself whittling when I was ten years older. Hopefully she is following a very strict technique but I am not sure a 5 year old could be trusted not to experiment? I guess if she does hurt herself, she'll survive.
(Gouges are safer)