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A plethora of answers and the movie itself reveal that children are in fact non-toxic for monsters.
Let's see:
In this scene, right after the conversation with Waternoose is concluded, Mike and Sully walk away. At this point a CDA worker points his/her geiger-counterish device to our heroes, and the device actually gives a warning, but a passerby gets jumped, and the scene ends.
So if the children are non-toxic, what kind of energy does this said device detect?
So a bit of conjecture but I think it's reasonable
Children screaming or laughing is considered an energy source in the movie. Presumably, a child simply breating normally would produce some amount of energy. Consider Randall's Scream Extractor. You can't scream with a vacuum hooked to your mouth so it would logically convert the breathing of the child to energy. So it would make sense that a child detector would detect the (faint) primary source of energy in Monstropolis.
We know that the Monster City is dramatically struggling for sources of energy, to the point that they're forced to rely on scream energy to power their home appliances. Despite their advanced technology, they seem to lack the ability to generate electricity from the most obvious source of power available to a high-tech society; nuclear fission. Why? Because the monster world has ultra-low levels of background radiation and practically no high radiation sources.
They most obvious solution is that the child detectors are detecting what geiger counters usually detect; radiation. In a world with practically no background radioactivity, the perfect way to detect an intruder from the human world (such as a human child) would be to look for radiation spikes that are out of the ordinary and to follow those. Note how the detector jumps each time it's pointed at someone who's spent time on the Scare Floor. Clearly exposure to Human World air has increased their overall radioactivity...
