It is important for children to learn the difference between right and wrong
In my opinion, it is necessary for children to distinguish the right and wrong in their early age. But punishment is not the importance way to help them to understand the that difference.
In the past, mostly in Asia, the parents always said that the children was not old enough to understand which was wrong or right. But I really don't agree with that way of teaching the children. The fact that telling the children the difference between the bad and good is really important to them. Acording to many science researches, children are affected easily by the way people around them saying. For example, if the child is messing with his sister's toy, but the parents not telling him that it is the bad behavior, he will keep doing that. So if the elder can talk to them in the serious way, show them what is good and bad. They can fix it in their young period. Help them to understand what is right or wrong can also help them to become a good person. The biggest reason is that the children can easy fix their action more than when they grow up. If they do the bad thing but no one tells them that, it may lead to the bad behavior in the future.
In my point of view, punishment is not really the best way to help the children recognise the bad and good things. There will be the situation that the children might be aggressive because they have been punished a lot. It won't be helpful anymore. Punishment may lead the children have the obssesion in what they have done and then they might not know what is wrong and right. They just think about if they do that thing, they'll get punishment. What we trying to do here is that to help them understand why that is the wrong and right. Don't try to make them turn into the robot.
Instead, parents and teachers should use more words to explain to them more details about why they should or shouldn't do that. The more detail we tell them the more they understand. If they can deeply understand that, they will turn that into their good behavior. For example, when I was a kid, I never say "please" when I want something. But then after one day when my uncle explained to me why should I do that, I understood and it has quickly turned into my good behavior untill now.
In conclusion, I think that it is really important to teach the children which is bad and which is good. We can choose the softest way to explain to them, it might be the better choice than using the punishment.