Counterfactual reasoning is a subset of abstract reasoning which is a subset of abstract thinking more generally. Children are capable of abstract thinking (e.g. pretend play) and even abstract reasoning (e.g. basic conditional reasoning) very early on. I haven't studied this field (though my spouse has), but a cursory reading of this paper shed light on the distinctions: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3582172/