A child product is an inventoried buying option that is displayed on a parent products display page. A parent product is a virtual "container" that is never sold. Instead it contains the various buying options.
For example a parent product may be a T-shirt and the child products may be the various colours that T-shirt is available in. People also often use parent and child products when a product comes in various package sizes. For example Cola may come in bottles and cartons. Each option has its own stock control, image and pricing. The Cola SKU may be your parent item and the bottle and carton SKU's its children.
Adding child products in Neto v5 and above is done through the product variations system. You can add a child product the same way you add a product variation.
Scroll down to the "variations" section on a product edit screen and click "add variation product". Specify a unique SKU, name, price, shipping dimensions etc for the child product. Save.
Once a product has had a variation product added to it, it is automatically presumed to be a "parent" product and the variations are its "children".
You can also import child products to parent products using the import system.