I think there are some red flags here. My son is 2 and loves to be naked. Off come the clothes at any opportunity. I think that is normal as they are not yet self concious. What would bother me is the comments about touching her peepee, and the "this is how to do it". I can't imagine that coming out of his mouth. I would be investigating this further for sure.
I think I would probably take her to a Dr. first and foremost and discuss with them. I might also take her to a therapist who is skilled and experienced in questioning children this age without putting extra ideas into their heads. (kids this age will often tell you yes to questions without completely understanding).
I do think I would be looking into this though. I wish you the best.
No its not normal in my opinion , this talk is unusual in a small child , who does she spend time with, are there babysitters , siblings who can you think of ?