Should people who watch a neighbor's child be licensed or is this law unreasonable?

If the law states you can't watch a neighbors child on a regular basis unless you are  a licensed daycare provider, there's a problem.  There are many in "my village" who are not licensed.  I, as well as millions of others, am one of those who has broken the law. I have watched countless kids on a regularly basis without even giving it a second thought.

Now, before I rip this law to shreds let me state I understand the meaning behind it.  These laws are designed to protect children. But does preventing your neighbor from watching your child while waiting on the bus really protect them or is this a "CYA Law" (Cover Your Ashcan) designed to protect the state (any state) from lawsuits?  Isn't there an easier way to work this out?  No one should be threatened with fines and/or jail (as the mom in Michigan) for just helping out a neighbor. 

Should neighbors sign legal documents stating that they can watch their kids as they wait for the bus?  Don't think it's possible?  I didn't think this was possible either but it's happening.  Pretty soon we'll just use Facebook to have our friends watch our kids using cameras.  I DO NOT like the changes taking place in "my village."   If the village is going to have government craft effective laws, then that government also needs to have some common sense.