For the last few months, M has been "thinking out loud". She would explain her thinking on many different topics to me as it happens. For example, we were watching Modern Family (yes it is marginally child friendly) and she would tell me what she think why a character in the show is doing certain things. This is not limited just to empathic situation. She does this for all topics -- how some mechanical device works, for example.
This is important for me because it gives me a glimpse into her learning and reasoning process. By listen to her narration, and help her adjust her thinking, I can teach her learning and reasoning. A key 21st century skill is learning to learn, and we now have a natural platform for me to do this with M. I am very glad.
To summarize -- it is much less important for me to "correct" her conclusions. If her mental model of how the toaster pop up the toast is wrong, well maybe she has just invented a better way! It is important to monitor how she reason, and both learn from her and help her develop her learning skills.
I wonder if we can explicitly encourage this narrative behavior in families, or in school?