Does your child need privacy?
I love the ParentCenter website and I found this on there and found it to be very informational.
Kristi Alexander, clinical psychologist says:
Surprising as it may seem, even preschoolers need privacy sometimes. For instance, your child may express a desire to use the toilet, dress or undress herself, look at books in her room, or play with a friend away from your watchful eye. While you may find these requests funny, don't laugh. Instead, show a healthy respect for her wishes, just as you'll expect her to honor your requests for privacy when she's old enough to understand that you have similar needs.
It's important, even at this early age, to teach your preschooler that she can create boundaries around her body, and that exercising a right to privacy is a natural part of growing up. She's also within her rights to reject a hug (even from Grandma) or other physical display of affection if she chooses. She should also know by now, for instance, that nobody should touch her genitals aside from herself, and you, your partner, and her preschool teacher or daycare provider during toileting or bathing. Around age 5, kids will start to understand the concept of "good touch vs. bad touch."
You'll also want to make clear to her that masturbation is a private activity that she can do in the privacy of her bedroom or the bathroom. Above all, take comfort in the fact that by telling you she wants to be by herself, your preschooler is showing healthy signs of her increasing independence.
Respecting her boundaries, though, doesn't mean she has carte blanche over her world. You'll want to continue to set limits to show that while you understand her need for privacy, you still need to do your job of protecting her from harm. When your preschooler requests that you leave her alone to play with a pal, for instance, respond matter-of-factly with your ground rules: "I can see you two want to play alone right now, so I'll be in the living room, and I won't come in while you're playing your game. But we need to keep the door open." Keeping the door open allows you to supervise from afar — in case they start climbing up the bookcase, for instance. Then let her have her alone time with her friend within earshot, and enjoy your own few minutes to read the paper or flip through a magazine before the two of them come barreling out to see what you're doing.