The Dad was clueless, absolutely clueless. That child is learning that this behavior is totally accepted and I fear for her. Some other dog may not be as accepting of her behavior.
When getting Bandit used to small children I would have him do a reverse heel, facing backward. A child was allowed to pet his back while I kept my hand beside his head so he could watch the child but I had complete control if needed. It did not take him long to get used to kids with all the grands coming into the house and he quickly learned to want to be part of their antics.