I agree with a regular sewing machine. You could find a nice used one at a repair shop. That way you know it is in good running order.
Select a really simple dress or top to make. Perhaps let the little girl pick it out from some you have selected. Then you can show her how a different fabric, collar, change of sleeves etc. can change the look. This will help her train her eye toward pattern selection and perhaps give her the freedom to design her own clothes. There are YouTube videos of girls who design their own clothes.