S.T.
When my daughter was 3 I had her littel borhter so she began asking about it. Many friends were pregnant so she was fascinated from about age 3-5 . About the same age I told her all about it in a very child friendly way - she'd even pretend to have a baby!
I told her that God has made women with a womb - a special place to babies to grow from a very tiny size (I didn't bother with the cells dividing - I just showed her a tiny dot on a page) until the baby is the size of a regular baby. (If you know someone who just had a baby I would say "like the size of baby Timmy".) I told my daughter that when the baby is grown enough and her eyes can see, and her lungs can breathe, then the muscles in mommy's womb beign to push the baby out in to the world. I told her that there's a special place where the baby comes out - it's not where we make urine, and it's not where we poop - but there's a special opening where babies come out when they're ready. Only women have a womb and a birth canal - men don't have these parts. I also told her that while little girls have the parts they don't work until they are grown up - jsut like boobies begin to grow when they begin to grow up. I explained that they begin to work when they're about the age of (fill in the name of a teenage girl). I as very sure to warn her that girls don't just have babies by surprise - I explained that a mom & dad have to love each other very much and when they are showing eachother how much they love eachother the dad does something like planting a seed when they're ready to make a baby. Soemtimes the baby begins to grow - and sometimes there's no baby there at all!
By the time you get to this your child will be bored and you'll be done for now. Don't be surpised if she asks you in a loud voice all about the womb and birth canal one day while on line at the grocery store or bank - which is why I use those terms and not uterus and vagina. I just think they're more PG and still reasonably accurate. I've heard too many little voices asking mommy when the baby was going to come out of her vagina.... ...and it's always when there's a lull in the conversation and it's really quiet and that little voice just booms across the room!!!
Have fun and good luck - this is such fun age!