They are SUPER strict - from the "interview phase" to prep and the actual show. On top of that, if a kiddo has trouble following verbal commands and directions, even basic ones, they'll get to "participate" but won't get to go do any of the combat on stage, which is basically what you waste half your day waiting for. I've seen this happen at both WDW AND DL, so they're pretty consistent on it.
They need to answer questions, be able to follow directions, sit or stand in a line without help or prodding, respond when called for, know their left or their right, be able to pay attention for lengthy amounts of time with numerous distractions. ALL of these things with numerous (and exciting) distractions.
Plus, there are effects on and around the stage - dangerous elements - and only a couple of "adult" supervisors for the large crowd of kids. This isn't something you can go up with your kiddo and hold his hand/force him to pay attention through - they are TOTALLY on their own.
I'm not a parent - I just travel with Littles - but even seeing my 4-year-old friend up there made me crazy-nervous. I couldn't imagine watching a 3-year-old.