Yes Herc, absolutely a child can interpret. Even at the age of a baby, the brain can interpret certain characteristics, ie. if parents are yelling and screaming, baby will cry. Toddlers do similar and worse. As children grow they can learn to block out certain aspects, hence why as an adult complex PTSD exists due to the nature of trauma over such a long period of time. PTSD is PTSD, the only thing that makes it complex is to change the only thinking behaviours ever known to a child and now as an adult.

Children build self esteem through how their parents interact and engage them growing up.