I met a 4 year old whose grandmother brought them to the Trans support group I was going to. They repeatedly, over and over, insisted they were a boy. I don't fall into this narrative, I figured shit out later in life, but I've known kids of a variety of ages, and they all knew who they were very, very solidly. there was no "wishy-washyness"

The difference between what you told your mom and dad, versus what these kids are doing, is Sustained behaviour. This is not one day I'm a girl, one day I'm a boy, it's behaviours like pressing down to hide genetalia, it's repeated, consistent insistence on "girl" clothing, or "boy" clothing, and several other indicators. (specifically the quoted text from the DSM-IV on that page)

Do they understand the societal ramifications of transitioning? No, it takes experience to learn that you're going to be hated for something you can't change about yourself. But they do know who they are.

I really hope they don't do anything permanent until the kid's old enough to make that decision.

As it stands currently, the only thing that can be done until the age of consent (16-18, generally), is to put a child on Puberty Blockers. All this does is stave off puberty until the child is of legal age to make the decision. If the child decides not to transition, then all they have is a late puberty - no fuss, no muss. Up until puberty, kids look pretty similar, so generally no action is taken except to let the child societally present as the gender they prefer.