The seeds of The Mandalorian season 2 theory go back to The Clone Wars season 3 and the Mortis story arc.
The Mortis arc is very complex, but it could be the reason that Baby Yoda is known as the Child and why Tano is allegedly involved in The Mandalorian season 2 story arc on Disney+.
The Mortis might not have anything at all to do with The Mandalorian season 2, but Dave Filoni does like to keep things connected.
As for how this ties into The Mandalorian, this could be why Baby Yoda is referred to as the Child.