At my school the type of contact and how hard it is depends on what the student is training for. If they are a "knockdown" or "semi-knockdown" student the contact is pretty hard, but with very specific rules governing targets. If the kid is training for a sport karate event, the contact level is lessened with a different set of targets. For the most part, my students under age 16 are there just for karate training and confidence building.
For the average student, we try to start their experience with sparring within the first week of classes with a more experienced student(one who has control) or one of the instructors. Students have the option of buying headgear with a facemask, but are not required. Nobody is ever allowed to have groin contact or hit to the spine side of the body. Elbows are allowed, as well as knees, but the elbows must be nothing more than a light touch and knees can be hard to the body with no contact to the head. Myself and my instructors keep on top of the action and we will stop the sparring before it degrades into a brawl. As far as their contact level, we let them go hard and they love it. The funny thing about it is, the kids who spar with the hard contact learn so much faster than the lighter contact sport karate kids I teach(I am not basshing sport karate) and they also have a lower injury rate.
Now, what is my reasoining for having harder contact in my kids classes? Simple, I do NOT want my students to be out on the playground, get hit by a bully or someone else, and crumple into a pile of crying child. I have some very small students, for the age that they are, that have been the targets of bullies and we have witnessed a change in their demeanor by training with the harder contact. They are not scared of getting hit and they can deal with the pain of getting hit quite well(obviously we prefer that they do not get hit). It allows them to deal with the situation with a calm head.
Am I barbaric? You betcha. And I will continue to be barbaric as long as I live.