My son is almost 8, and we have been quite up front with him about some stuff. He was only 18 months old when diagnosed so I couldn't very well do what seichel did, but what I have done is taken our collective experiences and used them to teach him. I've had to use glucagon on him a couple of times (not recently, but of course he remembers it vividly) so he understands why going very low is dangerous — which helps in terms of getting him to eat his smarties or drink his juice when he's not excited about it. And, while he is hypo-unaware sometimes, there have been a few lows that came on rapidly that left him feeling woozy and drained, so he does understand why it's bad from that perspective.
Where we have trouble is explaining to him why it's not OK to have very high BGs. I didn't want to get started on the long-term complications of diabetes until he was older, but then his father was Dx'd with T2 (and already has blood pressure and cholesterol issues) so we've started to have that conversation. Emphasizing, of course, that the bad stuff of hyperglycemia happens when people's blood sugar is too high for too long, and explaining that being sure to practice good self-care, use insulin with every meal and to get plenty of exercise is how those things can be prevented.
We had a trip to the hospital last summer when his pump failed 2 hours away from home and I hadn't brought any backup insulin with me, which was instructive to him both in terms of (1) the need to carry supplies with you EVERYWHERE and (2) the kind of stuff that you face coming to an ER with very high blood sugar. [We had to reluctantly acquiesce to a blood draw because they couldn't really treat him without it, but I had to put my foot down against them giving him an IV to deal with his "mild dehydration" because, as I pointed out to the earnest but perhaps not overly experienced PA, there was absolutely no reason not to rehydrate orally in a conscious, acquiescent patient. Grrrr.] The "time we went to the hospital" is the starting point to get him to accept, for example, I need to give him a shot he doesn't want when he's at 350 because his pump site pulled out 3 hours earlier. There are, after all, consequences to not taking care of diabetes issues promptly, and for him, the consequence of not managing a high blood sugar with an injection is best summed up in that disastrous hospital visit. So really, I'm making a practice of using the knowledge and experience he's had to identify reasons for good self care. I don't want him to spend a lot of time worrying about complications that we can hopefully prevent...