Theory of mind is an important social-cognitive skill that involves the ability to think about mental states, both your own as well as others. Developing this skill gives us the ability to understand that other individuals thoughts and beliefs may be different from your own and consider the factors that have led them to the mental state that they’re in. We evolve skills that help us attribute mental states, including emotions, desires, beliefs, and knowledge.
In order to interact with others, it is important to be able to apply your existing knowledge to your current situation. Along with having the capability to connect what's going on in someone else's head to infer their intentions which influence their actions. This includes hopes, fears, beliefs, and expectations. Some social interactions can be more complex than others which can lead to misunderstandings, but once you have a firm grip on your bearings then you are able to respond accordingly. This part of a child’s developmental process is vital.
Theory of mind can be enhanced by opportunities such as:
to engage in rich pretend play;
to talk about people’s thoughts, wants, and feelings, and the reasons why they act the way they do.
to hear and talk about stories, especially those involving surprises, secrets, tricks, and mistakes, that invite children to see things from different points of view (for example, Red Riding Hood doesn’t know that the wolf is dressed up as grandma).
This video is an example of the false belief test: