Kid with lots of questions could not understand how knowledge could be limited, and what imagination had to do with it.
I surprised myself by improvising an analogy based on historical events.
Before 1968, we knew we couldn't go to the moon. If we continued relying on that limiting knowledge, even today human beings would still have not taken that important toe-dip into the frigid ether of outer space.
But before 1968, Jules Verne's imagination envisioned a system that could take the first human explorers to the moon: a directed explosion powerful enough for a manned projectile to break earth's gravity and complete the distance to the moon.
Verne thought of a cannon, but NASA decided that rockets would provide a more capable delivery and retrieval system for this purpose.
So imagination breaks past the limits of knowledge, pointing the way for new knowledge to be discovered and constructed, making the once impossible possible.
Einstein's quote is apt in that it makes little sense if we only approach it from what we know. It takes some imagination to unlock the metaphorical sense of encircling the world, which suggests that while knowledge is confined and confining, imagination respects no boundaries and repeatedly crosses the world's geo-political borders like they were nothing. Unlimited. The actual word Einstein used was 'embraces', which has the same meaning, but the impact is warmer.