I'm not sure why this was downvoted. This same debate has taken place with every medium so far and the same inane point - "it's up to the parents" - was raised for TV, video games, etc.
Yes, it's up to the parents. But unless you have time to pre-screen every minute of content your kids watch (hint: if you have a job, you don't have time to do this), at some point you have to trust a ratings agency like MPAA, ESRB, or a company like Google when they say - "this content here, it's safe for kids". The obvious problem is that YouTube Kids is utterly failing at this.
What's the realistic alternative? Watching hours upon hours of kids content on YouTube and creating your own playlists? How do you stop a child from going to a "recommended video" afterwards? What about ad content, how do you filter that?
Edit: The only realistic alternative is not letting kids watch YouTube. This is fine, but then maybe Google should not be advertising a section of YouTube as "for kids".