Rabbi Joshua ben Levi said, “Whoever teaches his grandson Torah is regarded as if he had received the Torah from Mount Sinai as it is said, ‘Teach your children and children’s children,’ and then it says: ‘The day you stood before God your Lord at Horeb.’”
- Talmud Bavli - Kiddushin 30a
Rabbi Joshua ben Levi used to listen, every Friday, to his grandson reciting the weekly parasha. One week he forgot this, and entered the bathhouse. After he had begun bathing, he remembered that he had not yet heard the weekly parasha from his grandson, and he left the bathhouse. They asked him why he was leaving in the middle of his bathing, since the Mishnah teaches that once you have begun bathing on a Friday afternoon you do not have to interrupt. He replied, “Is this such a small thing in your eyes? For whoever hears the parasha from his grandchild is as if he heard it directly from Mount Sinai as it is said, ‘Teach your children and children’s children,’ and then it says: ‘The day you stood before God your Lord at Horeb.’”
- Talmud Yerushalmi Shabbos 1:2
Which is greater, to teach your grandchild or to hear your grandchild teach? Since R' Yehoshua ben Levi said both things, and he proves both points from the same verse; we can assume that the Bavli stresses one approach while the Yerushalmi stresses the other. (Although both are true)
If a child needs to be taught, then you will naturally approach the child within his level and invest your teaching within him where he is holding.
If you want your child to be able to teach, then you must encourage him to advance to a level beyond himself.
The first approach (Bavli) is that of the mechilta's view of the 4 sons. The second approach (Yerushalmi) is that of the Yerushalmi's version of the 4 sons.
The Yerushalmi calls the simpler son a "Tipesh" (foolish) which views his current state as a lesser position from which he has the potential to advance. Tipesh has a negative connotation. So the Yerushalmi advises to take the foolish son and transform him by the power in the Torah to become a sage. Teach him wisdom which is right now on a higher level than he is used to learning.
This is why the Yerushalmi prescribes learning Halachah for the "Tipesh".
The Yerushalmi also asks that the "wise" son be told the exciting and powerful story of what Hashem did. This is because the one who is used to intellectual study, needs to grow beyond himself and also exercise feelings that come from the depth of the soul, not just the letter of the Law.
However, the Bavli stresses making sure a child is soundly grounded on their own level first. So the "Tam" (wholesome) child is described with a label that is not negative, but positive in nature. He is to be told things on a level most likely to reach him now; which is the exciting story of Hahsem's power etc.
The "wise" son is also better reached by giving him what he thrives on - learning Halacha.