If the internet is limited to reading text, it’s no different than a book. But most internet use for small children is similar to watching television or videos, and it discourages the kids from learning how to sit down with a book. If you compare the writing and popular reading from 100 years ago (when video was introduced) to today, it’s clear that most westerners have seriously lost a lot of language skills. Since frum Jews watch much less television and video than goyim, our kids tend to have better reading skills.
Even for something small like, say, “Curious George”, offering the kid a video rather than a book is like offering a kid candy instead of vegetables – the calories may be the same but one is a lot healthier than the other, and when he gets used to sweets, he won’t want the veggies.