There are only 3 things that have to be entered. These are the product SKU and the product title. Obviously the SKU has to be unique as this is an individual product with its own stock levels etc. The title can be same the same as the parent product or something else. As you can see below there is no category selection. It is taken from the parent so is not needed.
The next thing to do is to select the item status tab.
The Item Status tab is where you would extra attributes. The normal attributes are not used here for the child product but, they can be used to alter the child product. For now though, it is better to ignore them.
If you scroll down the page you will see the new field/s. As in my example I added 2 attributes there are 2 new fields!
As you can see 2 new Item Attributes, as you can see I have crossed out the attribute list and custom attribute list. This just to show that these have nothing to do with creating a child product. Now the Item Attributes are filled in for this child product. So if this item is red and small, you would enter.... red and small!
You would then add any extra info you need, such as stock levels, size, price, downloadable file etc that applies only to this child and save.
If you wanted to add another child which is say blue and medium. then you would create another child product by selecting new item or if you were on the page that displays the child products just by selecting new from the toolbar and follow the procedures on this page for the next product etc.
I hope that explains a little bit about what child products are and how they are created. Obviously you have to create a new child for every item, you cant enter, for example, red,blue,green in the Item Attributes Color field and expect VM to create 3 child products. It will not, you would have to create a product for red then another for blue and then another for green.