Interpreting iconic gestures can be challenging for children. Here, we explore the features and functions of iconic gestures that make them more challenging for young children to interpret than instrumental actions. In Study 1, we show that 2.5-year-olds are able to glean size information from handshape in a simple gesture, although their performance is significantly worse than 4-year-olds'. Studies 2 to 4 explore the boundary conditions of 2.5-year-olds' gesture understanding. In Study 2, 2.5-year-old children have an easier time interpreting size information in hands that reach than in hands that gesture. In Study 3, we tease apart the perceptual features and functional objectives of reaches and gestures. We created a context in which an action has the perceptual features of a reach (extending the hand toward an object) but serves the function of a gesture (the object is behind a barrier and not obtainable; the hand thus functions to represent, rather than reach for, the object). In this context, children struggle to interpret size information in the hand, suggesting that gesture's representational function (rather than its perceptual features) is what makes it hard for young children to interpret. A distance control (Study 4) in which a person holds a box in gesture space (close to the body) demonstrates that children's difficulty interpreting static gesture cannot be attributed to the physical distance between a gesture and its referent. Together, these studies provide evidence that children's struggle to interpret iconic gesture may stem from its status as representational action.