It is ok. Puppies are not adults, he probably is in a transitional stage where he is becoming a little more wary about his surroundings, and with a kid running up, he might have been wondering if he was a threat.
With more/continued exposure to kids playing hard he should mature just fine.
There comes a time in every guard-dog-breed's life when they are no longer just a cute, fluffy little puppy enjoying life. Suddenly a light goes off and they seem to wonder if this is their job. Puppies and young dogs are more likely to make mistakes, and will make mistakes if they are not exposed to situations like the above. I am not saying you haven't up to this point. You probably have, but at that point the puppy was in oblivious puppydom perfectly confident that you were his protector, or simply not the least bit worried that there was anything to be concerned with.
Now, you are probably getting into that stage of life when the puppy is going to be unsure whether he should do something or not, whether everything is ok or not. Just continue to train. Ignore fearful behavior, but use it as a clue that it would be better to up the training so that the bond between you and he gets even stronger.
The biggest mistake people make when they want a guard dog is to keep the dog away from people and isolate it. If they want a dog that will bite everything and anything it may work. But for the rest of us we want a dog that is stable in 99.99% of situations, and if ever someone really funky comes at us or near our house we want that dog to bark his fool head off. The dog has a cache of situational memories that he can draw upon in the moment, and a young dog will react to situations that aren't threatening, nothing happens, cool, it wasn't a threat. The next time the sneakers run up, he will be that less likely to become concerned.
When our bond with our dog is ideal, the dog is near enough to us to read our impression of the situation before reacting at all. If we are uptight, they will be completely alert. If they recognize that we are aware of whatever it is, and are not freaking out about it they will draw there response or lack of response from that. They really aren't born with the knowledge of good or evil, but they can often recognize evil intent, fear, apprehension in someone. I think they aren't born with that either, but it develops with time.
Management
Leadership
Training
Socialization
Play
Exercise
Welcome to the wonderful world of German Shepherd puppies.
