Very sad. Our family had a child die aged 15 months and it was never spoken about apart from once when my Dad tried to talk to me but Mum interuppted, "we don't talk about that"

. Taking a card and asking how they would like you to remember their child is an ice-breaker, i.e. "I would like to be at the Service if it isn't private" although the funeral director will know the arrangements.
Our village shop is next to the Church so lights are dimmed and blinds pulled if there is a Funeral. Curtains are pulled in some villages but I am sure that if you watch from outside with the others, it shows respect.
After, do speak with the parents. A hug and "I'm very sorry" is probably enough. Allow them to cry and don't forget any children in the family. If they are old enough I send separate 'sympathy' cards because each one will have a different relationship to each other.