Ask Lemmygrad

My understanding is that memories form at that age but accessing them becomes very difficult as certain higher order functions come online, language chief among them. It may not be that we can't form long term memories (the fact that early trauma has long lasting effects is evidence that we can) but rather that we cannot access those long term memories on demand using our most common memory accessing techniques. That would explain why we see people accessing those memories in dreams, or through hypnosis, or in response to new trauma, etc.