I totally think you can't candy coat things on this one. It is too important. Unfortunately, if you don't prepare them well they will be at a disadvantage. Straight forward information, and detailed information is a must.
I also agree, the very young have a hard time understanding some concepts. With that said it's better to present things in black and white and cut down on confusing nuances. If you keep the rules simplified, it will be easier for them to take appropriate action if they're in a do or die situation.
I have found a really great resource that helped somewhat with my kids. John Walsh, the host of America's Most Wanted made a stranger danger dvd in partnership with Julie Aigner-Clark the creator of the Baby Einstein series.
If you didn't already know, Walsh's own son was abducted and murdered, and so he's dedicated his life to helping parents protect their kids from similar tragedies.
The video is very kid friendly in that it's entertaining, but it really gets down to business and covers a variety of very real and tough situations that could occur.
It really does a nice job breaking down the confusion about the various types of stranger danger...and even goes as far as to show kids what to do if someone they thought they could trust turns out to not be good.
The nice thing about a dvd like this is you can have your child watch it over and over for reinforcement. And you can use it as either a spring board for discussion or as follow up to discussion.
There is also a website with resources you can use to help with discussion that you can tailor to the age of your child. There is also a partner dvd on computer safety for kids and families too.
Check out www.thesafeside.com