Michelle (10) and Emily (8) Campbell invited me into their father's wood shop where they had prepared a series of demonstrations to illustrate basic safety precautions for kids working with wood.
They walked us through the differences in various types of eye protection, insisted on providing hearing protection as well through either ear muffs or ear plugs.
No dangly clothes or jewellery for these girls either as they don't want it getting caught in a machine. Long hair tied back is not only to keep it out of your eyes, but to avoid that automatic gesture with the hand to push your hair back. You need to stay concentrated on the tool you are working with.
As they say, no clunky shoes, no dressy shoes and no boots so make sure you don't trip and hurt yourself.
Dust masks will keep you from coughing.
When you start to introduce kids to your workshop, you not only need constant adult supervision while they are working, but you need an adult to properly prepare the projects since they are not always ready to use some of the bigger more dangerous machines. Hence you need to make some preliminary cuts and plan out the project. Leave the kids to do what they can do safely, competently and with a sense of satisfaction. With each successful project you can leave a little more of the process for the kids to do. The adult should do the set-up and prep work, not the finishing. Leave the kids the satisfaction of finishing a project, so if they have a very short attention span, pre-build enough so that they succeed with the project within their attention span.
Remember that most of the larger machines have child proof switches, a switch with a removable insert that you can lock away and block the more dangerous machines from being able to be turned on, in case they get into the workshop when you are not looking.
For a lot of good information about how to teach young kids to work with tools, check out Teaching Kids Woodworking -- Reaching for Success.