Julie - I admire your courage for bringing up such a controversial subject. And I'm sure I just wrote that to bolster my own courage to respond (as well as to buy time perhaps).
While there are some insights into the typical cognitive development of the "average" child, this is not often helpful in child rearing. Most parents parent either like their parents, or in reaction to what their parents did. Even many child rearing books seem to be focused on ideologies of some sort or another.
While children at that age don't know what they're doing in a larger context, they do often know what they're doing to get their smaller context needs met. For that reason - as much as I detest having to admit it - that dreaded behaviour modification approach is operative whether one believes in it or not. If being a brat gets that kid a kiss, there is no reason to change the behaviour. There are parts of the adult world where this plays out and it's not pretty.
Education begins the moment the kid comes out of the womb as far as I'm know, and quite likely even earlier to some degree. Everything they perceive forms their world and how it's supposed to run. They learn by example much more than by the stuff that's consciously communicated to them. On some level the human mind hits the ground running, with everything perceivable being fodder.
Knowing how hard it is, how many people tell one what to do, how much conflicting advice is is out there, and how applying any of it in the trenches involves all sorts of battles, I am reluctant to pass judgement on another parent. Who knows - perhaps they're from a culture where boys are little pashas and she could get flogged for saying no to her son. Other than that I think she is doing a disservice to that child and whatever tribe he will be inflicted upon.