Yeah I respect your experience but I think you're looking too much into it. "many kids love physical contact" (not all, some are very standoffish physically, you gotta learn each kids vibe) is one of the first things you figure out in child care. If your program has rules about that it can be very difficult because the kids will like autonomously, without asking, climb up on your thigh and pop a squat and thats technically against the rules but I personally feel really bad denying them appropriate physical affection that is on their terms. Thats why I dont like rules like that. And I think its largely good for kids as well, as long as its on their terms.

I don't get creepy vibes from this photo (I do get Nazi vibes obviously, but we're talking about something else). Just seems like normal family affection to me and a thigh is not inherently sexual. Seems like normal family affection to me. The fact that you would feel uncomfortable if a family member touched you there is valid but I dont think anything untoward is going on here.