The cat like grief of a 3 yr old

My eldest daughter is for the most part a very happy child, she is quirky, hilarious, stubborn, cheeky, annoying. She listens when she wants to and ignores you when she doesn't. She doesn't seem to believe in sitting down for very long but can amuse herself for hours with a trowel and some mud.

I tried to discipline her the other day and she stopped me in my tracks by shouting - "What have I ever done to you".  Where the hell did that come from? She starts nursery next week and I'm scared at whatever else she may pick up.

She is the essence of a 3yr old and I had to ask myself, how does a 3yr old process grief? She understands that she has a sister and that that sister did not come home and was in fact buried in the ground. She understands that we are sad about this. But can a 3yr old with an imperfect understanding of the nature of death truly come to terms with this grief, with this penetrating sadness.