Counterfactual conditional sentences (e.g., "If giraffes had fins, they would swim") involve an antecedent (e.g., "If giraffes had fins") which is false in the actual world. They also involve a consequent (e.g., "they would swim"), expressing a possibility given the antecedent. Reasoning about counterfactual conditionals requires thinking about different possibilities, and being able to choose among them in a principled manner. Reasoning over falsehoods is a particularly difficult form of possibility reasoning, and studying children's production and understanding of counterfactual conditionals can teach us more about how children develop each of the various components of this complex area of human reasoning and language. We know that children behave in various non-adult ways on counterfactual tasks through late childhood (e.g., German and Nichols (2003), Beck et al. (2006), Nyhout et al. (2019b)). However, the precise nature of the possibilities children consider differently from adults remains understudied. This dissertation answers the following open questions: How do children's counterfactual possibilities differ from those of adults? Do children quantify differently over counterfactual possibilities, and do their counterfactual possibilities involve non-adult linguistic or conceptual features? Answering these questions is significant for our understanding of children's possibility reasoning as a whole, as CF possibility reasoning and language is especially complex. We conduct four studies to address these open issues. The first study is a large-scale corpus analysis, comparing adult and older preschool counterfactual conditional natural production for a range of conceptual and linguistic features. We consider similar features to those in work such as Mandel and Lehman (1996) and Crutchley (2013), and provide a novel, broad, exploratory analysis of children's spontaneous production of counterfactual conditionals.The other three studies focus on exploring children's reasoning when understanding counterfactual utterances. We explore the mental models children generate in scenarios involving characters making decisions, to better understand children's changes to the actual world and the kinds of possibilities which they choose in counterfactual contexts. We find that children are more flexible with changing facts in a model of the actual world (e.g., events, locations of characters) as opposed to changing the laws of a model of the actual world (e.g., RULE: if character A goes into a pool, character B will also go into the pool) when compared to adults. In another study, we consider whether children reason over all possible worlds or a subset of possible worlds (i.e., whether they treat counterfactuals as strict or variably strict conditionals). We analyze the relationship between counterfactual language (e.g., modal used, could vs. would) and the mental models which children and adults reason over. In preliminary results, we find that children have a tendency to take an all-worlds approach, showing a less parsimonious reasoning strategy overall than adults (c.f., Lewis's closest possible world analysis). Finally, we consider children's preference for counterfactual possibilities with different features, building on prior analyses (e.g., McEleney and Byrne (2006), and Nyhout and Ganea (2020)). We analyze children's sensitivity to mutable features (e.g., whether they are more likely to allow changes to controllable vs. uncontrollable events), and consider whether mutability effects are robust to changes to linguistic features in the counterfactual scenario. We find that there is some effect due to predicate type (stage vs. individual level). That is, whether the antecedent describes a temporary property of a subject (stage-level), or an enduring property (individual-level). When the predicate is individual-level, children show a slightly stronger preference for a controllable event. We take this as preliminary evidence that children may have a more adult-like grasp of mutability effects in the case of individual-level predicates, since adults overall show a preference for controllable events.Taken together, our studies captured different aspects of children's counterfactual possibility reasoning. We considered the changes children allow to the actual world, the way in which they quantify over possibilities, and finally, the kinds of features which impact the possibilities they reason over (either linguistic or conceptual). To do this, we used scenarios in which characters must make decisions, instead of scenarios which are largely mechanical (c.f., Frosch and Byrne (2012)). This allows us to work with examples which are closer to the types of scenarios children will see in their daily lives, and incorporate some of the complexity involved in everyday counterfactual reasoning. Prior work has mostly focused on when counterfactual reasoning develops, and whether children are using true counterfactual reasoning or an alternative strategy (e.g., Beck et al. (2011), McCormack et al. (2018)). The way in which children model counterfactual possibilities and how that differs from adults was a key understudied area of counterfactual reasoning. Relatedly, modal verbs are a significant component of counterfactual language, appearing in the consequents of most counterfactual conditionals. Modal language is the primary way languages express possibilities, but the modal verbs (e.g., could, would) occurring in counterfactual sentences were surprisingly understudied. By analyzing both the conceptual features of children's counterfactual possibilities and the language used to describe the possibilities, we have made strides towards a better understanding of children's possibility reasoning, and their ability to apply it in counterfactual contexts. To this end, we have conducted several exploratory studies of novel features, as well as considered the kinds of strategies children may use when generating and choosing among different possibilities arising from counterfactual contexts. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. 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