By reassuring, the adults give them confidence to know they can talk with you. Knowing that only those that NEED to know information will be given it builds trust. Breaking that trust could lead to reluctance in sharing important information with us.
Limitations would be that some information may be necessary to share on a wider base, e,g food allergies or other allergies. All staff dealing with the child would need to know about this. Picking up arrangements, passwords or identification etc.
And of course any declarations of abuse or suspicions would need to be shared with management and those responsible for child protection in your setting and outside agencies.