I can clarify the legality on home education.
If the parents have requested that the LA allocate a school place and this hasn't been done yet, there is no legal obligation for them to educate their child while waiting. Of course, they'll want to do so, although in theory the situation shouldn't drag on too long.
On the other hand, if they haven't asked for a school place, or if they've been offered one which they have turned down, then they are electively home educating and must provide their child with an education. However, the requirements are very straightforward to meet.
The education doesn't have to be formal. It can consist entirely of discussion and child-led learning through play, for example, just as you are probably used to doing with younger children. Parents are responsible for arranging the education but do not have to deliver it personally. They could use tutors or grandparents, for example. Your friends are mistaken in saying that you aren't allowed to educate a child you are minding.
At the same time, if you aren't comfortable with the idea of educating a school-aged child, you don't have to. The parents can provide the education during the hours they aren't working, and ask you to provide childcare only. Home education doesn't have to take place during the hours of 9-3, and even when it is done formally, it typically takes very little time compared with school.