My daughter who is three has done a few bracelets, necklaces etc. they are without exception, awful - she picks the most horrible beads and puts them together in unspeakably vile combinations, but it is one of the few things we can do together that I quite enjoy. Hopefully she quite enjoys it as well.
Your neighbour sounds like a typical child free person, who frankly doesn't have a clue. Smile and nod, smile and nod.