I'm a pretty OK machinist, but not a professional. My reaction is to think about long / loose hair, long sleeves and loose clothing, and (unlikely for kids) neckties. Those would be of concern for any open blade cutting machine, grinder, etc.
Yeah, if they're going to market this as kid-safe, they need to have videos of what happens when child-size fingers are intentionally fed into the machine, when hair is intentionally fed into the machine, etc.
Almost by definition, you cannot presume (as a product designer) that children will be capable of thinking of their own safety; which is not the same as a parent who knows their child, making the decision to expose their child to developmentally-appropriate risk
That's a rotating spindle, which indeed can catch a loose thread and reel it in. An oscillating cuter moves back and forth, so it unrolls just as much as it rolls, with no net pull.
And if the oscillation strokes are short enough it can saw rigid material while just vibrating jiggly flesh (this is how the saws used for cutting off casts work). Though cardboard is also pretty floppy, so the mechanism here is probably different (mostly the puck guard keeping fingers out)