I’m really not sure! It’s something that I have often wondered, because some people I know swear that they can remember things when they were very very young. I don’t know about you, but I certainly do not. I think my earliest memories that I have now were when I was maybe 6, I remember nothing at all before that.
Usually in people, I think memory formation is helped by some kind of light shock or scare – if you feel you have to remember something you can trigger your brain to remember several parts of it. It’s strange but if I need to remember a number, I write it down. Even if I lose the writing, I remember it better because I saw it twice – once from the origin and twice when I copied it. So your idea of young children not being able to read or write is probably correct.
I think this is because some memories have multiple cues – that is, sensations. When you are young, I think you mostly remember visual things and maybe experiences of sickness or happiness. I’ve found that later on, you can begin to remember lots of experiences from single smells or sounds. I have lots of music which can bring back my entire teenage life just by listening to it!
But generally, it may be because young children do not have other methods to remember, or its possible that those parts of the brain don’t work very well yet.. I think the young human brain is very plastic and copes very well with changes and storing new information. In fact, the brain of humans is best at learning when it is younger – it is much harder to learn things (like for exams) when you are older because your brain has become more ‘solid’ and less adapted to learning!
I’m sorry I don’t know any better! I hope this helps answer your question 🙂