I had a patient recently ask me if it is okay for her thirteen-month-old daughter to be W-sitting during playtime. The short answer is: absolutely NOT! 
It is never ok to be sitting like this for a prolonged period of time, and should be stopped immediately whenever you see it. There are a few postural and developmental reasons for this, and I'll go into some detail on all of them:
  1. Hip Distortion
  2. Knee and Foot Distortion
  3. Poor Development of Core Muscles
  4. Lack of Cross-Body Coordination
1. Hip Distortion
With the legs externally rotated, this puts an enormous amount of pressure on the internal aspect of the hip joint. Muscles that stabilize the hip joint become short and contracted in this position, which restricts future mobility of the joint. This can and will impact the development of walking and how the hip and pelvis move later in life. The joint itself, which is made up of the femur bone and the acetabulum of the hip, has a greater chance of dislocating when placed in this extreme rotation. 
2. Knee and Foot Distortion
With the hips at the extremes of internal rotation, in the W-sitting position the knees are also placed in extremes of internal rotation, and the ankles are places in extreme external rotation. The shear force over the knee, coupled with the shear force in the hip, will inevitably cause spasm and contracture through the hamstrings and the adductor muscles (inner thigh muscles), as well as the Achilles tendon.
As a chiropractor who has been in practice for nine years, I can easily say that most of the patients who come into my office with low back pain almost always have something going on in the hips, and almost 100% of them have tight and short hamstrings. This is not the precedent we want to start forming with our little kidlets!
3. Poor Development of Core Muscles
A secondary—but important—side effect of W-sitting is poor use and development of core muscles (another common problem I see in practice—lots of weak core muscles, coupled with low back pain). Because the toddler is stabilized by the extreme rotation of the legs, they do not need to use the muscles in their core to stay upright, or to give feedback about balance and spatial awareness. The hips and pelvis are sort of "locked" into place, and the abs and pelvic muscles can just relax, as they have no need to work. 
4. Lack of Cross-Body Coordination
This is related to the poor development of core muscles. With a lack of muscle stability and tone in the abdomen, there is also a lack of cross-body movement, or as chiropractors refer to it, neurosensory integration. 
As most moms already know, cross-body movement is the essential key in crawling, and later walking (try walking without swinging your arms to see how awkward that is!). When in the W position, you will notice that the right arm of the child will stay on the right side of the body and will not reach across to the left, and vice versa. Bilateral movements are critical for brain development, and are needed for reaching more advanced developmental milestones later on (such as reading and writing). Interestingly, lack of cross-body movement has been noted in children who show signs along the Autism spectrum. Now, to be clear, W-sitting does not cause Autism, but is commonly noted in this group of patients, and is considered in part with abnormal development.
So, there you have my long and short answers on W-sitting. Whenever you see it, correct it. Prevention is absolutely the key here! If your child has developed a W pattern of sitting, bring them into see a Pediatric Chiropractor for a check-up and specific suggestions on what your child needs to correct. 
Be Healthy,
Dr. Stephanie