Filling small children in on awkward subjects is difficult to navigate and I'm not entirely sure that I got this one right:
MIL and I had a big falling out. I had inadvertently upset her over something and she said some very unpleasant things about me to DH. A short time later there was a family event, and I didn't feel that I could be around MIL. DS, age 5, wanted to know why I wasn't going.
I told him very simply that MIL had said some horrible things about me and that made me sad and that I didn't want to be around her for a while. This clearly did bother him as a few weeks later he asked me about it again, by which time I was able to say that I had had a conversation with MIL and that we had talked about how we could be friends again.
(I obviously did not tell him that I think she is a toxic cow and that I will be limiting my interaction with her to the bare functions necessary for her to maintain a relationship with him and DD).
He later asked MIL about it and she completely fobbed him off, saying that I had misunderstood and that she hadn't said mean things. She phoned DH and I in apparent distress saying that it was inappropriate that I had talked to him about our falling out.
My view, supported by DH, is that it is better to talk about big emotions in an age appropriate way rather than pretending that adults don't have these sorts of problems. DS is having some difficulties with another child at school and I would much rather he sees the adults around him experiencing similar problems and handling them appropriately than pretending they don't exist.
I know that young children view the adults around them as infallible, but I don't think that modelling some problem resolution would damage the sense of security that they get from this.