So basically, the law says 'Yes, you can sell your used childrens items at your garage sale', and 'No, they don't have to be tested'. HOWEVER, you are still liable if one of your items has too much lead or phthalates, and you can be prosecuted to the full extent of the law. Who is going to want to take that risk? Especially when you look at the possible penalties you could incur.
My children grew up in garage sale clothes, and now they both think a good bargain at Goodwill is pretty cool. The money they save there on clothes is money they can spend on something else they want. So sad.