If I were you I'd be mighty proud. Sounds like your little ones have shown a lot more insight than most adults these days when it comes to making a fire. They took all the necessary safety precautions. Even though they might not be quite old enough to start a fire without supervision it's pretty obvious they understood what they were doing.

Looks like your kids may well grow up into avid outdoorsmen/women. No need to criticize or even punish them for what they did. Just let them know they should not play with fire on their own yet and teach them the little tricks of the trade to stimulate their interest.