Genius.

Yang Dao gathering the spirit energy shocked the two ladies and they had no idea what words to explain the storm inside their hearts at the moment. They watched as the boy just breathed the spirit energy in and exhaled out. 

He did not circulate the spirit energy inside his body as he was too young for that at the moment. He had promised Yu Mulan about it and thus he took care of not breaking his promise. The breathing technique was enough to cleanse his body over time and make him have a solid foundation. 

The reason it was prohibited for children to cultivate before they were five years of age was because of the underdeveloped body. Despite being born to immortal practitioners the child was a human after all. They all have great potential locked inside their bodies but they were fragile at a young age.