our puppy at four months nipped the kids constantly! and she was with them all the time. We just taught them and the dog how to act, and a few months later she is much better. Just foldig their arms, standing still, saying "ah,ah!" not a punishment, just a deterrent. It is just that kids make movements and noises that are so enticing to puppies. I would try making an effort over the next few months to have her socialize with kids and hopefully it will get better. Maybe some kids that are confident with dogs and don't mind being guinea pigs and maybe getting a few scratches. I would think, IMHO, that over-reacting and keeping your dog away from all children would end up causing you to never be able to have her around kids, which is a bummer for everyone. Terriers may need more work than others with kids, but I hope you can figure something out. Again, only from my own experience, but you asked "why" would she nip: because little puppies nip little kids almost always, so give her time and training, this seems like normal behavior