How do young children learn so much about the world so quickly and accurately? Many researchers have proposed that children implicitly formulate structured hypotheses about the world and then use evidence to test and revise those hypotheses. I’ll describe extensive research has shown over the past ten years that even two-year-olds formulate causal hypotheses and test and evaluate them against the data in a normatively accurate way. But this work raises several problems. Where do those hypotheses come from? What algorithms could children implicitly use to approximate ideal Bayesian inference? How can we reconcile children’s striking inferential success with their apparent variability and irrationality? And are there developmental differences in the ways that children and adults learn?