A few years ago I let my 3 year old ride his bike with his older sister and brother (5 and 7 years old).
I walked with them, but allow them to get ahead of me, up to about 500m - 1km (~0.6mi). My instructions were always "wait at the next road so we can cross together."
Once, when they were out of sight for a while, I rounded the corner to find them surrounded by a concerned couple who proceeded to tell me off for allowing the youngest one out of my sight. I disagreed with them and continued to allow my youngest to ride many hundreds of times since. I got dirty looks from them a few times on subsequent walks.