First, it ain't easy. Children's literature is one of the most competitive arenas in publishing. Many agents speak in frustration of writers who think they're writing for a young adult audience but have a simple storyline and youthful language that's more suited to the Harry Potter crowd. Or writers gearing towards young kids but including sex, drugs, and rock 'n roll, which aren't topics that parents (buyers of middle-grade and children's literature) go for.
You have to know your audience, know the market you're writing for. You have to read up on what's out there now, what subject matter you can include, how simple or complex your plot.
Another depressing factoid: If the topic you adore is fashionable now, it probably won't be by the time you approach an agent. The industry moves fast, just like fashion. One agent recently told me, "We aren't even reading vampires anymore."
OK, that's the bad news. Good news is that if you have a cool idea, present it well to the right age of audience, and find agents or publishers who want that kind of book, you've got a shot at it. Here's a checklist to consider when you begin.
Picture books: These are also called read-aloud books or beginning readers. They are one story, rather than chapters (see chapter books, below). They are heavy on illustrations. In fact, the illustrations often tell the story more than the prose (but the story has to work, even be unique and interesting). The text might be mainly action and dialogue, because the illustrations give the child most of the other parts of the story. Normal word count is 2000 words or less.
Young chapter books: When a kid's book is long enough to be split into chapters, it's called a young chapter book. They can be easy readers, for younger kids just starting to read by themselves (kindergarten through roughly third grade), or chapter books with more complex stories, even subplots, for children second through fourth grade. These age groups vary, of course, by child. Illustrations no longer drive the story--and they may not appear on every page. Instead, the text adds detail, and the story is longer (average length is less than 15,000 words, though).
Middle-grade: Middle-grade readers are usually eight to ten years old, sometimes slightly younger. Their big topic is How do I get along with my friends? Peer groups are where it's at in MG stories. Characters need to be thirteen or younger. Readers always read up. So young kids will read about kids slightly older than themselves, more often than about kids their age. Choose topics that have to do with loyalties, friendships, and peer groups at school. Read up on this genre--the language is often simpler than YA. Some MG books, like Because of Winn-Dixie, have very simple plots (rescuing a dog in a supermarket). Some get into slightly more complex topics (divorce, death of a relative). Rarely does MG deal with very edgy topics like suicide, drugs, alcohol, or sex--that's more YA. Avoid risky language with MG. Readers are still finding their way out of the familiarity of home, just beginning to test their independence in the world. But things are shifting all the time, so it's good to stay on top of the current trends. According to agent Mary Kole (see below for her fabulous writing book on children's lit), the average length for MG novels is 35,000 words, considerably shorter than YA.
Young adult: Typically, the YA audience is thirteen and older, and the younger YA readers will read up too, going for main characters about two years beyond their age. YA topics are much edgier than MG, just like teen life. One popular trend are YA books about characters performing heroic acts in terrible circumstances (think Katniss Everdeen in The Hunger Games who saves her little sister then her whole community) or unrequited love (the Twilight series). My first novel, Qualities of Light, sold as YA; it was about causing an accident that put the main character's brother in a coma, just as she falls in love with her best friend. Violence, abuse, addiction, mental illness are fair game in YA. Kole says teen readers lean towards two topics, especially: romance and darkness. Teens look for empowerment through their literature, the characters they read about. They may not feel powerful in their own lives yet, but they want to read about characters who are struggling for it--gaining it, too. YA books need to be much longer than MG, about 60,000 words.
Hybrid YA/Adult: Some researchers estimate that a good percentage (25 percent or higher) of readers ages 25-44 read YA literature. Some publishers are taking advantage of this with offerings that have a YA narrator but an adult topic. A great book by a colleague at Grub Street, Celeste Ng, called Everything I Never Told You, is one of these hits. Another might be The Fault in Our Stars by John Green. Ng's book deals with a missing older sister, told from her younger sister's point of view. Green's story is about teens who are terminal cancer patients and fall in love.
A fantastic resource for all things kid lit is Writing Irresistible Kidlit by Mary Kole, quoted above, a literary agent who used to work at Crown Books. Check it out as your writing exercise this week. It has great tips even for writers aiming at adults.