

New answer for the specific context:
You did your best with the 2 year old. Toddlers are difficult because they just make noises and expect you to work out what’s wrong for them. Small snack and something to drink are always good starting points, followed by a distraction (like the nursery rhymes video) to get their attention off what was upsetting them.
With the 5 year old, you escalated by increasing the punishment to 15 minutes, and now your brother-in-law pushed it back down she knows you can be overruled. Talk to your sister and her husband to make sure you’re both clear on what limits your comfortable with and what specific punishments to give for breaching them, in line with what they’d normally give, so you can both be sure you’re giving out punishments they feel are appropriate, so there’s no room for her to get you overruled - if she goes to her dad you should both be confident he will back you up. She’s of an age where she is going to test what rules and limitations really exist, so you need to make sure she’s not getting mixed messages about it. You’ll have an easier time distracting her with something interesting than telling her not to do stuff.
The reason stuff gets inflamed and sensitive with soap and water is because it’s healing the damage, rather than just destroying everything in the damaged area and hoping it grows back right. Your body will generally do fine if you’re young and healthy, but as you get older it becomes more of a risk.
It’s not guaranteed to do more harm than good, but because it destroys healthy cells too it creates a risk that just doesn’t need to be taken. It’s not more effective at preventing infection than soap and water, and it’s not as effective as medical super glue for stopping bleeding, so there just isn’t a place for it any more.