I agree with this.
My friend suffers from anorexia. She had been 13 stone at the age of 13-14, and then lost quite a bit of weight (5 stone) between 14 and 16 y.o. (So she dropped to 8 stone.)
She became quite obsessed with food and her diet and her weight, and even crash-dieted at times. She did look a bit gaunt at 8 stone, and she stayed at this weight (well between 8 and 8 a half stone) for 3 or 4 years - til she was about 19 or 20.
Then by the time she was in her early 20's, she had gone up to about 9 stone 5, and she looked much healthier and rosier in the cheeks and was in a good place. Eating healthily, and exercising a decent amount.
Then some fucking bright spark decided to say 'you look much better now you've put some weight on, now you're rounder in the face and more fleshy in the arms and legs.'
I don't know what kind of fucked up, back-handed compliment this was meant to be, but it set her back several years, and she started crash-dieting again and exercising obsessively, dropping to 7 stone this time, and making herself really ill. Ending up in hospital after collapsing.
People need to STFU and not comment on peoples appearances. Do you seriously think that people won't take it personally if you comment about how they look?! And if you think 'you look better now you're getting fat again' is a compliment, you are fucking deluded! 
Whether someone has gained weight - or lost it - there is NO NEED to comment. None whatsover. It's just bloody rude and incredibly intrusive and personal.
The child may only be 5, but she should know better than to call someone fat. That is just bloody rude and nasty, and frankly, she probably picked up this way of speaking from an adult she spends a lot of time with. The way the OP is making out it's 'nothing' and that her daughter said it 'jokingly' makes it obvious her daughter has probably picked up this way of speaking from her.