I have many age 4 to 5 piano students. I know their hands are still small, but I wish they could play with good fingers? I am intended to emphasize that, but is it possible for such young kids? What age is the most appropriate to start teaching good posture, good position, and good fingers to the students?

I mainly put eraser or ruler on top of their hand so they don't move their hands up and down. Is it effective?

I don't put anything on top of young pupils' hands generally. I would be afraid it might lead to stiffness.

I think its best to appeal to their imagination at that age. I often suggest they shape their hand like a bit fat spider. The piano adventures series has lots of getting a good hand shape in their technique books, they use images like an opening flower bud and shaking the raindrops of the finger tips (see their piano teaching website, www.pianoteaching.com). Agree with maggiemay - wouldn't be balancing anything on anyone's hands - sounds like a recipe for tension and injury to me.

I'm teaching an adult returner at the moment who plays with quite stiff hands and wrists.
It appears that when she learned previously her teacher insisted on a rather fixed hand postition which she was constantly reminded of.
It's taking some time to get her more relaxed in her playing.

My daughter learnt a particular system designed for the young called "Piano Cats".... not too sure it's published as she was taught briefly by the designer/ author/composer and they had to make their hands like a cat's paw, in a sort of soft C shape and were told to "stroke the cat" (hand) to make it relaxed and not stiff!

I only start teaching children the piano when they can comfortably bridge 5 notes in their hand, this is typically 6, and they have the capacity not to squirm through a half hour lesson. There are some 5 year olds, 4 year olds and even 3 year olds that can do this, but the prerequsisite are physical and mental not age related.