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I like Endurance's suggestion on navigation and lost-proofing, though other than general orienteering, I'm not sure how you'd teach that to a kid. Telling them to stay on a trail? Stay put if they do get lost, so they'll be easier to find? Use calls and whistles to help people find you?
Care to share Endurance?
What Cedar says is spot of for what to do once lost, but the lostproofing that I was taught as a kid was more about staying found in the first place. It started in the mall or ski area parking lot; if we were separated we were to meet at X at YY:ZZ hours and stay there no matter what. Beyond that it included learning to familiarize yourself with the landmarks before going anywhere. That included natural landmarks along with tall buildings, major highways, and other points that could be recognized from anywhere in the area.
We'd often play a game of describing how to get home without describing anything manmade or using the four cardinal points. Describing my way home today might sound something like this:
Walk toward the mountains until you come to a swift creek, follow it downstream until you come to a small but wide river. Follow that river upstream until you go past three small creeks, then turn at a large creek. Go up creeks until you get to the first ridge and walk toward the noon-day sun until you come to the foot of a hill with red rocks. Go toward the setting sun up the hill until you reach the summit and can see the snowy peaks. Walk for three fingers of time toward the setting sun, then walk toward the ridge away from the sun.
The key is to learn landmarks where ever you go. After that, learning how to back check the trail at every intersection (turning around to see what the intersection looks like from the other direction) and if in doubt, kicking an arrow into the dirt to mark the way back to the trailhead.
It starts with teaching them to discriminate between trees, hills, mountains and valleys so they don't all look alike. Have them describe the differences they see between two trees. If they're the same species, what makes them different? Can they recognize those differences from all sides of the tree? From near and afar? A tall hill might look one way from one direction, with a rocky patch just short of the summit, but from the other side is it still the highest peak? Does it have any other unique features like a ridge that points toward another hill or peak?
Then there's the importance of mentally logging significant events. Teach them to make a mental note of each stream they cross, look for identifying characteristics for each crossing (rocks in the shape of a heart near the edge, a pool in the sun on the north side, etc.).
Teach them to hold a bearing by keeping the sun at a constant angle on their body/face. Teach them how to use their watch as a compass if the sun is out. All of these tools combined is what I call lostproofing. It's an internal mapping system that keeps you found relative to other things in the area. Fog may roll in and hide mountain peaks, but if you can recall crossing three streams, each with its own unique qualities and characteristics, you know you were walking in at 9am with the sun on your right cheek (north), and after the third stream you were only 100 yards from the parking lot, you're still going to get home even if it takes a compass to figure out which way is south now that the sun is gone and you can't see the peaks anymore. On the other hand, if you have to return cross country (bad idea, but sometimes the only option), knowing that there was a high peak across the river with snow on it across from the parking lot you started at, using that reference point can get you heading in the right direction. Getting a compass bearing on that peak and holding that bearing even when you lose sight of the peak will keep you moving in the right direction. At worse, you hit the river and re-assess which direction you need to go up or down stream.
