How does the record children feature work?

Child records are the records of the other records. If you remember in Resources there was clint and client_id columns.

For example you use Cobalt type as comment adapter for other cobalt articles. Then all comment articles become children of parent article or that one comments are submitted to. In discussion plugin for core Joomla articles, comment articles become children of joomla core article.

Sometimes you do not want those records to be visible in section where they are submitted.

Let's say you have tutorials section and forum. And you want forum like discussion under every tutorial. But you do not want to show discussions of tutorials in the forum itself. Only topics that submitted to forum directly.

Excellent.

How do i assign a record to another record as a "child" and how will they be listed (like the records field in full view)?

Use comment adapter Cobalt for content type.

Here is example. Here is russia cobalt article how to optimize links

You can see here list of discussions which are cobalt articles (1) and button to start new discussion (2)

And though these forum topics are children of this tutorial they are stored in forum section. And you can decide either to show then in forum or not. May be you want them to be visible only under tutorial article and not in the forum.

But in this setup forum show other clients and here in special forum category you can see list of discussions of tutorials with link what we are discussing.