Well i don't personally know about explaining it to a 7 year old but i can tell you when i explained it to my 8  year old daughter. I basically told her the basics of how there is only 21 million coins. I proceeded to tell her how just like with gold and diamonds, bitcoins have to be mined. Lastly i told her each wallet is like a bank vault and if you loose your private key you are screwed. She understood that and how it is secret money.