False-belief understanding as the pivot
Theory of mind is the understanding that other people have beliefs, desires, and knowledge separate from your own. Young toddlers show no sign of this: they assume everyone sees what they see, knows what they know, and wants what they want. Around age 4, a qualitative shift occurs. Children begin to understand that others can hold false beliefs: they might believe something you know to be untrue.
The classic test is the Sally-Anne task: a child watches Sally place a marble in a box and leave. While Sally is gone, someone moves the marble. When asked where Sally will look for the marble, 3-year-olds say the new location (where the marble is); 4-year-olds correctly say the old location (where Sally believes it is). This shows the 4-year-old can represent another person's mistaken belief.
From false-belief to complex social reasoning
Once false-belief understanding emerges, theory of mind elaborates. Children learn to track nested beliefs (Sally believes that Anne believes that...), to recognize deception, to infer mental states from behavior, and to understand that people act based on their beliefs, not reality. This capacity underpins reading, friendship, negotiation, and all social intelligence.
Children and adults with autism and some other conditions show atypical theory of mind development, often arriving at false-belief understanding later or reasoning about minds differently. However, many autistic individuals develop rich theory of mind with time and often use explicit reasoning rather than intuitive reading. The capacity for understanding other minds is fundamental to human social life, and its development tracks both cognitive maturation and social experience.