Paranormal explanations are also possible.
A child might have powers of telepathy or clairvoyance and might use them to create and dramatize a fictitious past life corresponding to that of an actual deceased person. But why should he do this? And would the extent of the powers this would require—amounting to “super-ESP,” as it’s called—be any more likely than reincarnation?
Another possible explanation is that the child has been “possessed” by a disembodied spirit. For some cases, this explanation may in fact seem a better fit. But for others it seems to offer no explanatory advantage.
Particularly interesting are cases in which a child shows special skills characteristic of the previous person. Knowledge, it might be argued, could be passed normally to a child from some other person, or accessed by the child himself by super-ESP. But skills are forms of learned behavior. How could a child, without training, acquire the skills that another person had?