Ew.

First, it is wonderful that DD told you! and that you could speak with her about your values in the situation. That's good mom work.

Next, follow up with the care providers about what their policy is for handling bullying and encouraging social skill development in the kids. Depending on the structure of the place, you may want to speak directly with the instructor who gave the "knock down their castle" instruction or you may want to go further up the supervisory chain.