Time-outs are an extremely common discipline tool to deal with unwanted behavior in children. The purpose of time-outs is to stop, and sometimes to punish, the behavior so that it won't happen again. This form of discipline is so common, even recommended on shows like "Super Nanny," that it's important to consider whether time-outs create the desired results – that is, change in behavior and long-term learning.
In general, I do not favor time-outs; but, like many things in life, intention is key. My problem with time-outs is that they are generally punitive in nature, as in, "You just sit there and think about what you've done!" What are children more likely to think about in such a situation are such things as is how mad they are, how unfair the situation is, how they will get back at their parents for punishing them or at the friend or sibling for "getting them in trouble," or how they can avoid getting caught in the future. While this may stop a behavior in the moment, it is critical to ask if this sort of experience is actually likely to improve a child's behavior in the future?
If thinking critically about time-outs, the basic idea is to literally take some *time out* for a situation that is unacceptable. The focus is reactive – stopping in the moment a behavior that is unwanted or inappropriate. This can be accomplished through redirection to an acceptable activity, through verbal interruption and direction, or if needed through physical separation from the situation. But timing a separation, confining the child to a standard or exact location or adding external disincentives is more punitive than reactive. It is meant to "teach" the child not to do it again by inflicting some sort of displeasure as a future deterrent. In reality, this rarely works in the long term and often backfires. It shifts the focus from the behavior to a power struggle between parent and child and may actually increase undesirable behavior.
Over time, punitive discipline also harms the relationship between parents and children – creating distance in support of establishing "authority." But ultimately children will need to make their own decisions when they are older and less supervised. Empowering young children to evaluate and make good choices in managing their own behavior, rather than just training them to listen to authority and bow to punishment will ultimately serve better both parents and children. In addition, a good relationship later, when potential issues include drugs, sex and physical safety is not worth undermining over sibling toy tussles and stray crayon marks.
I choose not to use the words "time out" with my daughters. When unacceptable situations arise, I prefer to break them up with words or with physical removal if necessary (like to another room, or sometimes by leaving a location), and then clearly state that the behavior was unacceptable and usually why (e.g. – it was unsafe, it was hurtful to another, it was destructive to property).
It's important to remember that when a child is angry or hurt or physically struggling is not a "teachable moment." Non-judgmentally echoing emotion ("You are angry that I took you out of the room) and helping the child calm down first until they are ready to talk about the situation will be more productive. Sometimes, children just need some time alone to cool down, which feels more like a traditional "go to your room" or "sit here" time out. The difference in my mind is empowering the child to determine when they are ready to discuss the situation and/or rejoin family or friends with improved behavior.
Say the child is hitting a sibling over a toy. For most toddlers and preschoolers, this behavior would be considered "age-appropriate" but still not acceptable. The key lesson is to use words, not hands. If they won't accept an alternate toy (redirection), if they won't try to alternatively use words when assisted verbally and continue hitting, then tell them they will be removed from the situation if they don't stop, and do so.
If they calm down and are ready to go back and play acceptably, where's the benefit then in forcing them to sit and stew as a punishment? The goal is to stop the behavior – if the child can go back and play acceptably, then everyone wins.
What about future behavior? Will they do it again without a punishment to deter them? Maybe. It really depends on their age and whether they have the mental ability to remember in the heat of the moment. Some behaviors may take multiple interventions and some may change for good the first time. But I believe that a child is more likely to respect a parent who has given them the power to "be good" than one who has punished them for "being bad."
Time out is really just the tip of the iceberg the debate between punitive discipline and a philosophy known as positive discipline. For more details, I recommend the following excellent books: