Our little boy that just turned 3 years old. He's been potty training for the last little while, so is in various stages of undress a lot. He has taken an interest in his penis because it has been so exposed lately. This is absolutely normal and nothing to be concerned about. In the last week we have heard various comments, such as,
"Daddy's penis is big."
My response, "Daddy is bigger than you, so he has bigger hands, feet, and penis." That totally satisfied him.
Last night he said, "My penis gets bigger when I touch it." My response, "Yes, it does. Sometimes it's small and sometimes it's big."
He's not overly concerned or fascinated with his penis and leaves it alone most of the time when I respond calmly like this. It doesn't draw special attention to it, but I do have to remind our other children to take their laughing elsewhere. Then, remind them later that the body is sacred and it's not appropriate to laugh at a sincere comment from their little brother.