The dining plan allows 1TS, 1CS, and 1 Snack credit per person per night. You can redeem them as you wish, such as using 3 TS credits one day, and 2 CS credits another day, etc.
Child credits MUST be used for kid meals where available. Almost every restaurant offers a kid menu with a few exceptions. You will be required to get a kids meal. Your Key to the World card will show how many adults and children are on your dining plan so you can't order more adult meals than the number of adults listed. So, if you have 2 adults and one child, it will say 2A/1C and you will only be allowed to redeem 2 adult meals and 1 kids meal at any restaurant (either counter service or table service). You can share meals at CS locations if you choose, but you are not supposed to redeem only adult meals. It is against Disney policy. If you want your child to be able to get adult meals, you can pay to upgrade him to an adult diner, in the case that he may eat a large quantity or will not be happy with the kids meal offerings.

A lot of parents upgrade their younger kids.
Oh! Each person on the dining plan will also get their own refillable resort mug. You can fill your mug only at your resort during the length of your current stay. Eligible beverages are soda, water, coffee, tea, and hot cocoa at most resorts.