Little children and the mentally handicapped are but two groups of the larger body of people who died without full accountability and the blessing of knowing the law. Although their circumstances are somewhat different, the Atonement still offers them a great blessing. By virtue of the mercy of the Savior they are not condemned for not abiding a law of which they knew not.
“Where there is no law given there is no punishment,” declared Jacob, “and where there is no punishment there is no condemnation; and where there is no condemnation the mercies of the Holy one of Israel have claim upon them, because of the atonement; for they are delivered by the power of him” (2 Nephi 9:25; see also Commentary 1:250-52).