Children are full of curiosity. That curiosity is a spark of learning, which we should maintain. Parents, however, sometimes kill the curiosity by trying to shut them up, especially when asking 'difficult' questions, like for example questions about sex. Then, how should we respond?
First, disclose only what they really want to know. If they ask about "Where does baby come from?". Minimum disclosure would be, "Baby exists from Mama's egg and Papa's sperm." If the child doesn't ask further, that maybe is what they really want to know. There is no need to explain further as they may not understand yet.
Second, adjust our answer to the child's age. If the child has develop reasoning skills, we should add explanation about the process of it, like "They meet inside the woman's body and form a baby. The woman keeps the baby safe in her uterus for nine months until the baby is ready to come out." Further, if the child has develop the sense of right and wrong, we can add moral explanation to sex. For example, "It can only be done by married couple."
Third, answer the question calmly. It is important that the kids get sex education from home, rather than from friends or internet. If we are agitated answering their questions, they may reluctant to ask further questions, and we lose the chance of developing trust and open communication to them.
Personal take on this topic
Answering sex questions from a child may be intimidating for some parents. We need to be ready to come up with appropriate answers whenever the child asks. Thus, we need to have a good knowledge of to handle this. And, the most important things, be prepared with the answers.