The small child is seeing his sibling being operated. This helps in behaviour shaping of the small child. It is known as
Children observing other people getting rewarded for positive behavior are likely to behave positively. Children observing an older sibling defying and being punished are less likely to defy. This is otherwise known as vicarious learning.
Modeling, a behavior management technique is based on this theory of observational learning by Albert Bandura.

Reference: Pediatric Dentistry: Principles and Practice, 2/e Muthu and Sivakumar, pdf no 245
Desensitization
Modeling
Coping
Hand Over Mouth Exercise
Modeling