Answer:
This only occurs on very large machines, when a small kid goes in after a prize. A small child (age 3-5) can fit through the large exit chutes of some machines, and may (unsurprisingly) be unable to get out.
In detail
The kid wants to win a plushie out of a crane machine, but instead of winning the prize, the kid loses his money and gets mad. So he kid gets the idea to climb into the machine to claim the prize he wants. If the kid is lucky, he will manage to struggle out of there with the prize. More likely, the kid will wind up crying for help, i.e. sobbing frantically and banging the glass inside the claw machine. Fortunately, someone usually sees them before they can become injured, and gets help.
If you end up seeing a kid in there, freaking out, don't worry. If you cannot assist the kid in exiting the machine safely, you have two choices. Either go to the arcade manager (who can open the machine) or keep the kid calm and dial 911. Many of these machines will have their keys on the premises.
Did someone really need to ask this?