What size clothing to knit for a child, and how accurate the pattern is to that size, are the two toughest things about knitting for children who don't live with you. It's fun to give a garment that both the parents and the child will love, and it's even better when the fit is perfect. "How did you know?" is a great question when everything works.
But how do you know? Well, there are several good starting points. The following applies to US sizing.
In babies (up to 12 months) the child usually fits in garments sized for double their age. A 2 month old baby wears 4 month clothes. (I know. This makes no sense. It's just how it is.) If you have any doubt, knit a size larger, or find a way to ask the parents what size the baby is now, and do the math for the anticipated date the child will wear the garment. A baby who is 4 months old now will be wearing 18-24 month sized garments this fall and winter.
For toddlers, height often dictates size more than anything. If you can get the height of the child, you're golden. You can look on sizing charts and make the appropriate size.
For children sizes 6x - 14, or ages 5-12, you need the size they usually wear from the child's parents, or from the child himself. Depending on how long until you plan to give the garment, you may want to knit the next size up.
This chart is the most thorough and accurate children's size chart for knitting dimensions I've seen, and correlates to most mainstream children's clothes measurements. The measurements listed are for garments in most of the cases, not for the actual child's body. Height is an exception.
Now, put it all together. If the child's height dictates they wear a size 6, and the chest measurement for that size is 25", it's time to check the sweater pattern for its width at the chest. The garment should be approximately 12.5" wide at the chest, because that means it's 25 inches around total. Most children's garments fit a little loosely, and that's fine. If the pattern is way off (more than 1.5 inches) make a different size. Most patterns have schematics showing the exact dimensions of each part of the garment for every size. Pick the pattern size that has roughly the same measurements as the chart listed above, no matter what the pattern calls that size. (We've all come across mediums that were really smalls, and mediums that were really extra larges. Disregard the name of the pattern size. Trust the numbers.)
Remember that children's clothes receive harder wear and more laundering than most adult clothes, and choose your yarns accordingly. Cottons should be mercerized (controlling shrinkage), wools should be superwash, and acrylics should have a high twist. Keeping these things in mind will assure that the clothing you knit will be worn and cherished by the child you love.