No Stupid Questions

Eh, there's no single magic bullet. You stay honest, but past that, you gotta tailor it to the individual kid. Some of them will want a more "scientific" explanation (as in the big brush strokes of reproduction), some will zone out if you say anything past the "that's what animals do" level of response.

The closest to a general rule you can get is to answer what they actually asked, not what you think they're asking. Kids tend to ask things in a very immediate wat, exactly like your example "mommy, what's that?" So you answer what that is in the simplest terms you can and let follow up questions shape the conversation.

You also tend to want to stick to their vocabulary range, rather than trying to expand it at the same time as answering them. To a five year old, having you try to explain what the word masturbation means would be way, way more problematic than the fact that the animal is masturbating, if you see what I mean. You'd just say that's how the lizard wants to play. They just don't have the vocabulary to understand the full explanation yet. So stay simple. If they're ten, you can expand more because they'll have the language map to understand what you're saying if you say "oh, it's trying to mate with the object"

But, you still have to shape that you the individual. Not every kid handles information the same way. Some kids might grasp the concepts of reproduction really easy, others might not, so you gotta stay flexible.