The loose, unfitted way some little girls' dresses are designed right now makes it possible for them to become tops after they've become too short for dresses! Hooray for this type of recycling! And hooray that dresses are back in style for females of all ages!
If you take a look at your neighbors' little girls or see them on a playground or at a school, you'll see that there isn't a "standard" length. But a little girl who wants to play needs her dress short enough to let her run and climb. I love the current idea of having little shorts or leggings underneath the dress, so she can really play, still be modest, and not have to worry about what her clothes are doing.
Some time, just for your own edification, you might take your daughter on a little shopping trip. Let her try on two or three different styles of dresses in her size and the size above, and see how they look on her. You'll want to buy as generous a size as she can look nice in now, so that she can wear it quite a while, without its looking way too long or way too big. So it'll look a little "relaxed" right now, but may fit her well by summer. Once you see for yourself, it'll be easier for you. I used to do this with my girls at the thrift store, because there's such a greater variety of things to select from. It taught me a lot.