Play fighting can be beneficial and can actually prevent real fighting among children, according to the Raising Children Network. The Australian parenting network claimed that rough-and-tumble fighting allows children to understand their own strength as well as that of their friends.

By developing a hierarchy of weaker and stronger friends, children learn who will and won't be able to beat them.

The Raising Children Network advised that play fighting can be distinguished from real fighting. Children who are play fighting will continue to play together afterwards, whereas a real fight will see the children split up once finished.

Different ages enjoy different types of play fighting, with babies and toddlers preferring gentle movement. Toddlers also like chasing and dancing.

Play fighting is apparently most popular with children of primary school age, particularly boys. Primary school children will enjoy rougher play; girls generally chase and boys like to wrestle and use more contact when play fighting.

Source: http://raisingchildren.net.au/articles/rough_and_tumble_play.html/context/237