My kids are 6, 8, 10 -- when it came up, and it still occasionally does as the next grows up, I told them it meant "f-you" (what we learned here) and that it's usually very rude and unkind.
I've also told them, though, that sometimes, adults or teenagers will do the middle finger with their friends to be silly, the same way I might say "shut up" to dh in a silly way, even though I wouldn't say "shut up" to most people.
Then we usually launch into a cross-cultural chat about gestures when the "why does it mean that?" question comes up -- dh worked with a man from Brazil ... who, after several weeks of dh making a circle with his forefinger and thumb to show "OK" when they had language barriers, finally approached dh -- and asked what his problem was. He said to dh, "I come to work every day, I work hard, and every day you call me a-hole, a-hole, a-hole. Why is this?" Come to find out -- in Brazil, this gesture does NOT mean "OK." It means, "a-hole."
Conversation meanders from there about language and so forth.
