I encourage you to talk to her about it. Notice the behavior by commenting on it neutrally. Ask her if it feels good. Ask her (when she's not doing it) where she got the idea to do it - often is happens randomly - i.e., she touched herself and noticed it felt good. Mention that you notice she doesn't answer you when she's doing it. Yes, talk to her about privacy. Ask her where else she does it. Try to find out if she has any questions about her body. use it as an opportunity to talk to her. It is an uncomfortable and difficult area, but one we need to bravely open up for discussion with our children just as we would with other areas of human behavior. How does that sound?
Isn't it crazy that we even have to address these kinds of questions about our babies!! I don't know about you but this is all a bit overwhelming for me. I have a 10 y.o. son who has not yet even asked about sex yet my 5 y.o. daughter tells me that when she closes her eyes she sees her self lip kissing a boy in her preschool class. I know children explore and are curious but can't this stuff hold off another 10 years!! Hang in there, chayahindy, you're not alone.
I believe so. But you will have to gently stress that it should be done in private. Even if it takes a long time. Also keep a close watch that she doesn't start using objects as she gets older, or complains of pain there because of too much activity.. Activity like that should be confined to her room only. Good luck.