Q. If children are operating from the second brain layer, how does that fit in with understanding right and wrong?

A. First, discriminating right from wrong can be a somewhat nebulous concept. Every adult brain has its own opinion of what that really means. Up until about age four, the brain does not understand the difference between reality and pretending and lots of parents punish their kids for "lying" when they really don't understand imagination. By age 4-5 the third layer is certainly developing and  the child is likely able to understand the difference between imagining and reality. Childhood is about helping the brain learn and practice skills that will likely really come into their own when the corpus callosum is myelinated about 20-21 and then when the prefrontal cortex is developed in late twenties. This is especially true related to issues of morality, conscience, and willpower.

Secondly, the brain does develop from back to front but I wouldn't say the child is "operating" from the second layer per se unless the brain is fearful and has downshifted away from whatever they have going on in the third layer....