Funny you should ask this today...
I had a 10 yo girl present to our ED today in DKA-new onset type 1 DM. She had had a BG in her doc's office, and was sent to the ED with the parents only knowing that it had something to do with diabetes. So I had to sit down with the parents and explain to them what diabetes is, and what it means for them, and for their daughter.
I think the "best" way really depends on who you are, and what the parents are like. I started with basic information, and then got more detailed as they asked questions. I also printed out some basic Q and A about diabetes for them. It's important, obviously, to be empathetic, and remember that parents may be short tempered or demanding because they are emotionally vulnerable. Try to be patient and answer questions, and stop back when you can to check in. Reassure them about who will be taking care of their child-which specialists may be involved, that their PMD will still be a part of their care, and how long and in what capacity you will stay involved. Give them websites where they can go for information.
Be honest, too, no matter how hard you know it will be. The mom today was really upset on reading that her daughter would have to have shots every day (the poor girl HATES needles). We said that yes, her daughter would have to have shots several times a day, but also let her know some of the ways to manage shots (pumps, giving it to herself so it isn't so bad).
The good new is that most kids get better-even though DM is lifelong, it is manageable; most cancers have treatments, etc. There are exceptions, unfortunately, but parents for the most part will have a gut feeling when something is really wrong.
I'd be interested in others' experiences, too.