I bought this peg loom a few months back, but was afraid my five-year-old was not ready and would become frustrated. We pulled it out this afternoon and she did a great job!
This loom uses a long needle for weaving so it seems easier for little hands to control than the potholder-type loom with stretchy bands. I had her weaving over and under and she quickly figured out that she could run the needle under the whole row at once and pull the needle through. She also enjoyed pulling each row down and making sure that the yarn was neat and not twisted. We bought our loom here, but they have them all over the place. This will be a good use for leftover yarn.