I really like the idea of teaching children about recycling.  It helps instill very important values at an early age.  Like teaching anything to a child, it should be broken down to its simplest form, kept brief, and made fun!  This is how I would go about it: 

Recycling is a way of reusing something so we don't run out.  It's important to not waste things, or someday we won't have any more!  The most common things we recycle are aluminum cans, plastic bottles, glass, and paper, although lots of other things can be recycled too.  All we have to do is make sure those items are clean and sorted, and we can bring them in to recycling centers, where they make them ready to be used all over again!  Plus, some places even pay you money to bring in the things you can recycle.

Incentives always help.  If you allow the kids to collect, clean, and sort the recyclables and go with them to drop the recyclables off, they can make money while doing something for the environment!  This forms the connection between a positive rewarded feeling and a morally and socially conscious action.