I love working with fondant. My little girls only two and a half and her favourite word nowadays is mine. That and mummy dont talk. So whenevr i bake cupcakes I let her have herr way decoirating onne or two when she decides their "mine"
A lot of kids seem to enjoy baking... I think it's mainly to do with the fact that the outcome is cookies, cakes and other types of desserts.
It's great for kids to cook, and I think the limit should be more in the time it takes. Kids rarely have the patience to spend long times in the kitchen so when going for normal meals, I'd say stick to something that takes a very maximum of 30 minutes to prepare.
While they might not always be the easiest dished to make I've also noticed that their motivation is a lot higher if it's one of their favourite foods. So basically, teach them to cook what they want to eat!
Also, a lot of "No-bake" ideas where you have to let things set in the fridge also helps wonders too for their attention spans - I find they can make batters, read directions, and follow advice just fine - for a limited time (in most cases). I wish I had someone dedicated to learning as your nephew was, but I have to work with what I go haha!
Most breakfast foods are pretty easy to make, so stuff like crepes, waffles, bacon, etc. If you're REALLY worried that they'll burn themselves or something then they could help make salads and cold foods (sandwiches for example)
That is an awesome looking cake. It looks some good too.