I know that is very had to understand but many child are interested in each other's body's. Explain to him it was wrong and why it was wrong. You shouldn't let things like this ruin a perfectly good friendship that you have with the other mom.
Kids are very interested in many things at a very young age. Say something like I'll explain it to you when you are a little older. Have your son learn why that was wrong, and it is in the mistakes that the children learn the most from.
I am going through the same thing with my son. He's extremely bright, exceeds in sports and this has been an issue for over a year now. twice he was caught and both tmes confided in me as his mom. I feel really quilty when telling his father who is all about discipline (not hitting but yelling and punishing and frankly chastising) but I feel like this is something I should not keep from his father. He asked me today if Santa still brings him presents if he does something once and never again. It broke my heart so bad I had to turn around on my way to work just because I needed to think. His father is way into porn and I've asked him if my son could have seen magazine or something and of course gets all defensive. I am very careful about what he watches. I told him today that boys are curious there is nothng wrong with you but I know that he is the instigatr in these situations.
As far as I'm concerned, this is normal for young children. They're curious about things. I remember doing stuff like that when I was a child. I also remember getting caught a couple times. My mother would have a talk with me about my behavior and I would feel guilty afterwards but that didn't stop me from doing it again. I soon grew out of it. I'm not saying you should ignore it but don't get too stressed about it. I hope your friend doesn't let something like this get in the way of your friendship. I would recommend supervised playing from now on.