Generative AI is becoming an integral part of children's lives, ranging from voice assistants and social robots to AI-generated storybooks. As children increasingly interact with these technologies, it is essential to consider their implications for developmental outcomes. This Element examines these implications across three interconnected domains: interaction, perception, and learning. A recurring theme across these domains is that children's engagement with AI both parallels and diverges from their engagement with humans, positioning AI as a distinct yet potentially complementary source of experience, enrichment, and knowledge. Ultimately, the Element advances a framework for understanding the complex interplay among technology, children, and the social contexts that shape their development.