sure kids <5 years old probably don't own smart devices. But many those EU citizens will own also ipad, apple watch and probably some older devices that they use from time to time (as a backup)
It’s only first unique install in a 12 month period on iPhones in the EU and then only the ones that are above 1M that are charged €0.50 in monthly installments.
"A first annual install may result from an app’s first-time install, a reinstall, or an update from any iOS app distribution option — including the App Store," [0]
so updates and reinstalls count as well - just all installs, reinstalls, updates in 12 month period counts as one. But next year if you just make a bug fix to still support new iOS version that update will be paid as well to all your user install base.
[0] https://developer.apple.com/support/core-technology-fee/
Free apps aren’t exempt. The fee is only for EU users. If you take the EU iOS market share of 33.3% [1] and the number of EU citizens (448 million) [2], you get ~150 million — and that’s assuming 1 smartphone/citizen, which is probably too much.
[1] https://gs.statcounter.com/os-market-share/mobile/europe [2] https://en.wikipedia.org/wiki/Demographics_of_the_European_U...