We found out the gender of the baby last week, and on Saturday we had a little family meeting. (Our entire conversation was much longer but I cut it down to the summary version.)
P.S. I asked her about whether she has a baby in her stomach because starting a couple of months ago (way before we started talking to her about the baby), she started saying that she had a baby in her stomach, and that her baby was a tiny mouse. We suspect she overheard something about babies in mom's bellies.
P.P.S. I have since told her that when she was a baby she was in mom's stomach and she grew and grew and then came out and kept growing and now she is big and strong. She really took to this idea and keeps repeating this over and over.
P.P.P.S. 'Sue' is the name of one her beloved dolls at daycare.