Isn't it general practice in Muslim communities that face coverings are only in public, and that the kids' environments, both at family and at schooling (often gender segregated) would be free of face coverings?

The kids obviously grow up fine, but IMHO they do see the faces of their peers and parents pretty much always.

Yeah, my understanding is that they are in public places. And even then not in segregated that is where there are only women present. Or homes.

Fair enough.

My overall point, though, is that it is easy to imagine a horrible, negative effect on a child's psyche, but it is more likely not a problem. Humans, and kids in particular, are fairly robust and adaptable creatures.

In my experience, for most fears about X people have, X alone usually is not damaging. However, being surrounded by people who are convinced X is bad will make it more likely that the person will believe it. This tends to cause more issues than X does.

If a kid has parents and other close people around him/her who believe wearing a mask and not seeing people's faces often is bad for the kid - then it will be.

I feel like the better takeaway from your example is that even in cultures that go to extremes with face coverings, they don’t have masked people caring for young children. :-/

I’m from a Muslim country. Even in the most conservative Muslim countries, women do not wear face coverings around children they’re carrying for. Most children grow up around female family members who are not wearing face coverings at home. In school education is gender segregated, and in a single gender setting face coverings are not required.