My daughter (7) asked her friend (6) to lick her "down there"

Yesterday my daughter had a sleepover. Her friend's aunt is a friend of mine from 5th grade, and the girls frequently have sleepovers/playdates, sometimes at my place, sometimes at theirs. Today when I picked her up my friend told me that the girl's mom overheard my daughter asking her friend to pretend they were husband and wife. She found it weird and went outside to peek through the window and heard my daughter tell her friend that she'd really like her (the friend) to lick her "there", pointing to her vagina. The friend refused, and the mom then entered the room and told them that it was time to get up and have breakfast and didn't say anything about what she'd heard.​When my friend told me this, I was mortified. I have no idea where she got this from. I know that kids are curious and might experiment, but she's far too young to understand certain aspects of sexuality. I try to be frank and honest whenever she asks me a question, but so far she has only asked basic stuff such as where babies come from. I told her daddies plant a seed in mommies' bellies and that was it, she hasn't asked for more details and I left it at that, thinking she would probe for more info when she was ready. Because of this, I thought she was far more innocent than I was at her age, and now this happens.​I haven't talked to her yet because I honestly don't know how to approach the subject. I'm not even sure I should say anything. The more I think about it, the more confused I get. Am I overreacting? Is this normal? How do I talk to her about it without making her feel ashamed? I don't want her to grow up thinking that sex is dirty, I just want to make sure her behavior is appropriate. via /r/Parenting http://bit.ly/2Tny6OM