From the website:

Kids Movie Creator" is a 3D world creation and movie composing platform, which are designed for kids aged 7 to 12. In KidsMovie, children are encouraged to use their imagination to create beautiful and interactive 3D virtual worlds and even 3D cartoon movies.

KidsMovie is one of the first professional 3D content creation platforms which can be quickly mastered by young children. Children can create and play safely in KidsMovie both in its online and standalone editions. Such creative activities will help children develop skills in imagination, story making, expression, and communication, etc.

According to the website, kids can create and share content, play together online, build on each other's work, and add character behaviors to avatars. It assures safety, of course, but for the extra-concerned there's a stand-alone mode. It comes in a free limited-resource download (available on CNET's Download.com), or via a one-time purchase for the full version.