I think it depends how often and the age of the child some is natural ,a lot in my opinion is not, so just be aware.you do not give any other details that would make it easier to answer.In small children it could be there is some irritation or UTI and not truly masturbation.
Oh, and yes it is normal and very common. Nothing to worry about. When they are old enough to understand just tell them that it's something to be done in private. Otherwise, don't make an issue out of it at all.
There are tons of nerve endings in that area, and it just feels good. In babies and children there is no sexual component to it, it just feels good plain and simple.