Learn Italian: I ragni fanno paura al bambino.

In English, we usually leave out "the" when talking about things in general, like "spiders". In Italian, you almost always need the definite article when talking about broad categories. So, you must say I ragni (the spiders).

Literally, what does "fanno paura" mean here?

It literally means "they make fear". Italian frequently uses the verb fare (to make or do) combined with a noun to describe causing a feeling. So, fanno paura means "they cause fear" or "they scare".

Why is it "al bambino" instead of just "il bambino"?

The full expression is fare paura a qualcuno (to make fear to someone). Because the action is directed to the child, you need the preposition a (to). It combines with the definite article il (the) to form the combined word al (to the).

This sentence uses "fare paura" (to cause fear). How would you tell the child "Don't be scared!" using the negative imperative from this lesson?

While fare paura means to cause fear, to be scared is avere paura (to have fear). To tell one person (tu) not to do something, you use non + the infinitive verb. So, "Don't be scared!" is Non avere paura!