This is a very interesting question but it has not been addressed too much. Here was my answer:
I have no problem with having these championships for young children. The problem is not with the young kids. They can handle the pressure of the competition fine. The problem is with some parents, which happens in every sport, not just chess.
That is why I am not critical of my children with their chess results. As long as they enjoy the game, focus and give their best, I am satisfied. I believe that when parents over pressure their children, it may cause the opposite effect. The children’s love and passion for the game may go away. The fun may be gone.
In the U.S., parents are not allowed in the playing hall during big national or state scholastic events. This does help. However, it still does not stop parents from behaving inappropriately after the game or between rounds.
Federations cannot completely fix this problem. There are usually much more pressing issues to handle. Therefore, the only thing we can do is to educate the parents better. That is why I recently published tips for parents and coaches here: https://chessdailynews.com/important-chess-etiquette-advice-for-parentscoaches/.