When I was picking my daughter up from her babysitter I noticed something very odd. The sitter's four-year-old son likes to touch himself a lot, which I think is normal for boys. The one thing I did not think was right was when he whipped out his private part and all my babysitter said was for him to "take it easy." This is a problem for me and I do not feel comfortable with my daughter being around that. Am I just being paranoid and should not worry?
You are right in thinking that normal toddler and preschool behavior includes self-exploration of body parts and a natural curiosity about the bodies of others. These young children also lack a sense of privacy and social appropriateness at this age--ideas they will absorb from society later. So random displays like the one you describe aren't automatically a big worry.
However, taken out of the larger context, I can't guarantee that this four-year old's behavior hasn't been copied from an inappropriate adult model. You need to reassure yourself that there is nothing else about your child care situation that gives you pause, putting the behavior back into it's complete context.
Even if you have no other qualms, you are bothered by what you saw, and I would suggest you explain to your sitter that, even if this isn't abnormal behavior, you would prefer not to have your daughter exposed to it, so she can be more alert in the future.