Actually, you will find both in children's literature-- characters who are animals, and characters who are people. You will also find characters who are mythical creatures with amazing powers. Children's literature often represents the imagination, and kids seem to enjoy reading about improbable but entertaining characters, just as they enjoy watching these kinds of characters in cartoons.
Authors of children's books develop the plots of their books to entertain, but also to inspire a love of reading. they know that kids often play "pretend": for example, they pretend that their pets (or their dolls or action figures) can talk, or that there is some exciting adventure and they can be part of it. Thus, the stories in children's books, with talking dogs or pigs that fly or mice that teach good manners, allow the young reader to enter a world where the only limits are those of imagination.