OP here. The incident happened outside while all the children were playing. There is a giant play structure with several slides and hiding places. All the teachers (4) are outside. The children where behind the play structure. It wasn't until the teachers noticed several kids crowded around looking at something (they were quiet) that they went to check it out. They thought it was strange to have a group of silent kids behind the structure. I was told it happened quickly and it had just happened before I got there.
I
don't think the teachers are at fault here. The kids could have been looking at a strange bug or a cool toy. I think it was the silence that clued them in.
My biggest concern is that this child would do this and would know or want to do this.

I am assuming it is Daisy that initiated the activity, but it could have been the little boy too. Although I doubt it. For years I have been listening to stories about Daisy and have witnessed some things too. She just seems wise beyond her years.
Her teacher once told me that my DD and Daisy have a on again off again friendship. DD wants to be friends, but can't accept the naughty behavior. DD often comes home and tells me "Daisy was being naughty again." or "Daisy was a good girl today." or "Daisy said she isn't going to be naughty anymore." I get the feeling my DD calls her on her bad behavior.
I am really concerned how the child would know or want to participate in that kind of behavior and where and who did she/he learn it from.
I hope the owner of the preschool does the right thing here. I will ask her. Even if she can't tell me anything, I want her to know I am concerned and that I don't appreciate my DD being exposed to that kind of stuff. Maybe it will make her more likely to react to the situation. Especially because I NEVER have complained about anything before. She may take my concern for the situation seriously. The owner is very nice and always has done the right thing in other situations. She runs a tight ship, so I have faith that she will handle it appropriately.