There are few reasons for doing netilat yadayim
A. There is ruach raa on the hands,which means there is a certain tumah that lays on one hands which he will need to remove
B. The hands are dirty
C. Hands have touched places that have sweat
Ruach raa would come either from waking up in the morning or a person that went to a cemetery, cut his nails, etc, but for keeping hands clean it comes from either touching a covered place of the body like for example under the sleeve etc, or getting hands dirty from nose discharge.
The difference between them is that the things that bring ruach raa need different care, according to many in order to remove the ruach raa one must wash three times his hands and with a keli, utensil. The reason is explained in the Ben Ish Chai that in order to make that spirit leave our hands we wash one hand and it jumps to the other and so on three times until it leaves.
When our hands are dirty we only need to wash our hands or at least wipe it on clothing etc.
One more thing that ruach raa does is it makes the food that we touch in the morning before washing ta’me to the point that it can bring one to sin or close his mind (so to speak) on a spiritual level (sh”la).
The Mishna Brura writes that children should wash their hands when waking up because they touch food and according to what was just explained we can understand the importance of this.
There are different opinions at what age this starts but the recommendation is as early as possible because of the above reasons and because it brings to the child kdusha and tahara. It’s needless to say how important it is in our generation to get a little bit of that.