The Little Einsteins' universe is in fact the first Matrix the Architect mentioned in the second movie. Also, the kids are in fact orphans.Or at least an abandoned corner of it, as seen through the eyes of the kids. This would explain their capacity to, amongst other things, defy physics like nothing. Also, they're able to travel just about everywhere because the Matrix (or their corner) APPEARS to go on forever but in fact, well, doesn't. And as orphans? Each of them came from very rough circumstances: Quincy and Annie were street musicians; Leo, some other type of street performer; and June, an underage prostitute. Shortly after their parents' deaths (or getting abandoned by them or whatever legal guardians they had), the kids were amongst the Architect's earliest test subjects who didn't reject this Matrix right away, unlike most people. Not only do he and the Oracle seem like the closest things to kindhearted guardians that they've met (especially the Oracle), but their young, fragile minds are so messed up from their previous experiences that they just don't care anymore. And the fake interactivity? If their parents died, maybe the kids still remember them deep down; are in fact talking to them; and are imagining how they'd respond. If it's the other possibility, same deal except with the Architect, Oracle, whomever. This may mean that Rocket and Big Jet are Agents whose rivalry in the show is just them playing along with the kids. Or maybe the rivalry is real and this is their means of self-therapy. They could even be Agents in training.