The question in their mind is what is it like for a child in this setting in relation to the Five Outcomes of every child matters - incorporating the day care standards - soon to become the welfare requirements (EYFS)
They will ask questions appropriate to the level of the staff member being interviewed. If theyre not happy that the answer is adequate they will start to look further and ask other questions to other staff to check out if the understanding is isolated or across the team.
They will expect staff to know, understand and have helped to develop the polices that demonstrate how the setting works.
IE if they observe a practitioner managing behaviour inapropriately they will check this out further, may even make some enquiries as to what your policy says.
Staff need not worry what the children do while being observed by an inspector - its more about how they deal with it.
So the secret is to share policies with staff, ensure they understand the standards and policies that determine how they work and not put on a show for Ofsted as at the end of the day the standards are the for the everyday benefit of the children in their care and not just for Ofsted - Im sure theres a saying in their somewhere!!
Quaslity of care produces better outcomes for children
Eppe research (can be Googled - see link below) will inform staff of the effects that a quallity pre-school setting has on the outcomes for children.
http://www.ioe.ac.uk/cdl/eppe/pdfs/eppe_brief2503.pdf
Quotes from the research
The quality of pre-school centres is directly related to better intellectual/cognitive and
social/behavioural development in children.
There are significant differences between individual pre-school settings in their impact on children.
Some settings are more effective than other in promoting positive child outcomes.
Disadvantaged children in particular can benefit significantly from good quality pre-school
experiences, especially if they attend centres that cater for a mixture of children from different social backgrounds.