I am a fellow parent and manager. I had to un-stick Lego, wipe little bottoms (off-cam) and stop fights during professional presentations. Or tell my 5 years old to put on some trousers before he comes into the camera.
Other answers talk about ignoring it if it doesn't affect work performance.
Having to take care of children while trying to work does affect performance. It will make your boss more distracted during meetings. He might work less hours or be less effective during working hours.
Still, that does not matter. It is a hell of a time to go through, and literally hundreds of millions of people have to work while juggling childcare.
In my company, senior managers (of one of the largest in the world) made a point of normalizing that by bringing their own kids to video meetings.
As for how to respond:
- acknowledge the child: "Hey, nice to see your daughter! What's her name? How old is she?". Ignoring her presence completely makes it feel like you're annoyed or frustrated by her.
- in subsequent meetings, you can greet the child directly: "Hello Adele, great to see you again".
- don't offer to reschedule the meeting. A parent can't plan that in 3 days' time at 4pm the child won't need to pee/eat/hug. And asking about a reschedule sends the subtle message that you don't find these interruptions acceptable.
- don't dwell on it. It's likely that your supervisor wants to work, not to talk about children. So after an initial acknowledgement, move on to whatever work topic you have
- look for some time (maybe a separate meeting or your regular 1-1 if you have one) to ask how they've been doing. How online school works. Is their partner also working? It's kind, polite and helpful to build a more humane connection with others during a difficult time. Take your clues and don't intrude if they don't want to (Germany is known for its cold professionalism).
And last, please don't forget that while the world has, by now, got bored of everything the pandemic landed on us, the children's needs are the same as they were back in spring, when all of us were taken by storm by the shock and and stress of the sudden changes. Parents need the same patience and understanding.