I think the single most important element of all of this has nothing to do with baseball. It's critically important to help children understand that it's consistent, productive effort (some might say, "hard work") that provides the necessary linkage between ability and achievement; regardless of the nature of the objective. They learn over time that improvement brings positive results, which inevitably causes them to have fun in the process.
My father was one of those who had all the ability in the world, but he never seemed to understand the necessity of applying oneself diligently to a pursuit. He taught my brother and me this lesson through a lifetime of repeated frustrations.
Beginning at an early age, I made sure that my sons knew the need to apply themselves consistently to whatever they chose to do. It's ended up making a big, positive difference in both of their lives; despite the fact that they chose very different paths to follow.