The best practice for using essential oils safely is to always dilute the essential oils into a carrier before applying topically. The reason for this is to prevent your body from becoming sensitized to the essential oil and to prevent irritation to the skin. Very rarely does any person need to use essential oils higher than a 5% dilution.
Children under the age of 2 should not use essential oils topically unless it is under the care of a Certified Aromatherapist.
Below are the general ratios for proper dilution. Note that children under the age of 10 should use a 1% dilution.
Essential Oils should not be ingested, especially in water, unless you are under the care of an aromatherapy professional qualified in the area of ingestion.
The reason for this is because oil and water do not mix. When an oil added to water is ingested it is not diluted. The undiluted oil can irritate the mucous membrane of the mouth, esophagus, stomach, and intestines. Over time, these organs can become severely damaged. Here is what NAHA has to say about it.
The Alliance of International Aromatherapist says this about internal use, "AIA does not endorse internal therapeutic use (oral, vaginal or rectal) of essential oils unless recommended by a health care practitioner trained at an appropriate clinical level. An appropriate level of training must include chemistry, anatomy, diagnostics, physiology, formulation guidelines and safety issues regarding each specific internal route (oral, vaginal or rectal). Please refer to the AIA Safety Guidelines for essential oil use."