How should the feedback sounds be explained to children?
With kids 6-10 you can tell them what the beeps mean (high beep means correct, low beep for incorrect response.) For children 3-5 we find that having beeps on but not mentioning them is better. With kids 6-10, even if the beeps are not mentioned, they don't ask about them. It is set up to sound like the computer saying "I got your answer." Either way (mentioning/ not mentioning) is fine.
What if a child gets all of the practice items wrong? Do I still proceed with the test trials?
Usually, we don't find terrible performance early on. You should make sure the child knows exactly what they are supposed to do. You can tell them everything about the task-including that sometimes the sizes of dots are different, etc. and that they should always answer based on number. The kids generally find this to be very intuitive. Just try to have your instruction finished before trial number 6 or so, and from that point on you can just pepper in, "You are doing great!" and positive comments like that whenever you feel it is necessary. Because it is psychophysics, we want the kids to know exactly what the game is and be comfortable with it. Then, the measure is focused on their internal ability and not on their understanding of what is expected of them. You can give lots of feedback up through the first 1-6 trials (6 isn't a magic number, it is just that by trial 6 any confusions have likely been cleared up.)