T.C.
Hi . . . yes, it's always a frightening experience when our little ones catch us in the middle of . . . well, you know! My husband and I have thought about what we'd say if it ever happened (it's been close, but not quite). We've always said at 2, they just don't need to know about everything. Older kids, we think, can get the detailed, "real" answer . . . but at this tender age, maybe it's best to just give a brief, undetailed answer . . . with just a little bit of truth. Depending on your position, you could tell her that you were hugging or dancing laying down. At tht age, they can be diverted very easily.
I guess with her checking herself and her brother out, she may have seen more than just you guys moving under the covers. Self-exploration is natural . . . if she's still asking about what she saw you guys doing, you might not be able to side-step the question. I'd tell her that you were just loving each other like mommies and daddies do, and maybe that can be the end of it.
Good luck and God bless!