At that age, it's normal experimentation. Although I don't find it normal and wonder what on earth made them think to do it: at 4 my sister slept naked with her "boyfriend" because "the grown-ups do it so we will". So what has one or the other child seen to imitate?

I'd have done the same as you, but also talked to the other mother about what her son sees. I know I've had to tell DH off for slapping my backside and telling me I look "sexy" in front of DS because it's not appropriate behaviour in front of such a small child. I would hate for DS to copy that with any other child!