Help with my 3 1/2 yr old daughter?

my daughter has a friend whose a boy that's her age they we're playing and all of a sudden he pulled his underwear off and she saw his ""and she said ewww and she pulled her underwear off and she said mommy how come i don't have one of those?she even touched the little boys ""i know their young i don't know what to do about it?any suggestions?