Photography nerds rarely bring this up but pretty obviously the best camera for kids is an old smartphone. A 2020-era iphone has a better sensor and is cheaper than this thing, assuming they don't already have one around. Photo transfer problem is solved, and the interface is already familiar to kids for better or worse.
Folks who are into photography and want to introduce it to their family/kids want to gently introduce the skills of photography while enabling their interest in taking pictures. Smartphones are great at just "taking pictures" but don't offer a lot of creative input. Table stakes like depth-of-field and color balance are either impossible to configure or very difficult on a smartphone. Controlling exposure is very difficult as most smartphones try to just aim for neutral exposure. Software can change exposure settings, and on Android I use a paid camera app that gives me control of shutter speed and ISO to control exposure.
But you're correct that if picture quality and ease of use are the main points of contention, a used iPhone or used Pixel phone is probably all you need to get sharp pictures and decent auto-HDR.
That's not to say that an $850 Fuji body is the only way forward. I'd probably buy a younger kid a used point-and-shoot and buy an older kid one of those cheaper compacts. That Fuji body is almost as expensive as a real mirrorless that I shoot with for paid work.
Kids point and shoot cameras have none of those features. In fact, an old smartphone has far more photographic controls than almost any kid's camera will.
If the choice is a $50 Kid's purpose built camera or a smartphone, the smartphone is the clear winner. Nobody was suggesting an old smartphone over an $800+ Fuji.
You have to have used a kid's point & shoot to understand how terrible they truly are. My kids had one which couldn't even disable the flash entirely. The sensor is a cheap 1 MP out of a webcam. The modes are three: Photo, Video, and Review. There is no manual controls, no photographic tools, maybe MAYBE you might get some fun filters.
Right I'm not talking about a kid-specific point-and-shoot. There's lots of used point-and-shoots on eBay of varying quality from the 2000s and there's still some compacts being built now, though those tend to be marketed toward vlogging.
Most "kids cameras" sold today just use cheap webcam sensors (e.g. 1 MP, low dynamic range) that are sold for excessively high prices. They have few physical controls, no viewfinder, and are bulky.
Instead, why not grab a used iPhone SE, the camera sensor is still fantastic, and it will likely cost you less than most kids cameras. Remove everything except the Camera App, leave it in Airplane mode, and it will last roughly two days on a single charge (over a week idle).
PS - You can find deals on used cellphones by looking for "network locked" ones, since you won't be putting a SIM in it anyway.
There’s also the last-gen iPod Touch, which is getting a bit long in the tooth but as a cell-phone-without-a-cell-radio is nearly perfect for this application, and is an incredibly nice form factor.
A 2020-era iPhone has good default-setting software. That's good for learning about framing.
Beyond framing, though... The sensor is pretty meh; use an app like Halide to take fully-unprocessed raw shots (not still-Apple-processed Raw out of the camera app) to compare. The processing is good, with a caveat - it's good at producing a certain look, but there's limited ability to go beyond that with the default software.
Still, old iPhone + Halide will let you learn a decent bit about exposure and shutter speed and ISO. Not being able to control aperture is gonna be your biggest drawback in terms of learning about photography. But having a sensor that's a bit less forgiving than a Fuji one might be good for playing with - make the hard decisions about framing instead of just assuming everything will always be well-exposed. (I haven't used the X-half, but a considerably cheaper used X-whatever would be much better than a 2020 iPhone for non-computationally-processed shots).
