Child Xbox Live accounts without parental permission to join online servers cannot join LAN games. They get an error message saying they do not have permission to play online.
Prior to version 1.2.13, they could play over LAN.
This means Marketplace content is unusable in multiplayer. It can only be used when logged in, which disables multiplayer.
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Cleaning up old tickets: This ticket has not been updated recently (~1 year+) so is being closed as Cannot Reproduce. If you feel this is still a valid issue then please comment, or create a new ticket following the Issue Guidelines.
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This is very frustrating as my kids can no longer join each other's games or myself locally with LAN games... isn't that the point of the "better together"?