In terms of fashion, a line is a group or collection of 5-7 related pieces. Sometimes it is more. Sometimes the pieces are actually sets because children's lines tend to be sold as sets (bringing the total pieces to around 10-20). The point is that the pieces are related. The pieces have similar colors, tones, mood, feel. From a manufacturing end, the pieces repeat fabrics to minimize and utilize fabric purchases. The clothes have a consistent fit.
Some say a line tells a story. That is the more difficult thing to interpret or even observe. Not too many customers care about your source of inspiration unless it is an integral value that they share. Usually customers care about price, fit, comfort, and finally, "Does it look good?".
To muddy the waters, newer children's designers on Ebay and Etsy do collections based around a fabric grouping. They offer up one of a kind outfits that utilize a particular theme or fabric print. They will call that one outfit or piece a collection. Some of these designers evolve and manage to present a true line. In any event, they are inspiring some RTW collections.
A good example of a well merchandised line can be found at Tea Collection. The Ancient Elegance boy's collection does some things really well (I am not posting their pictures here - I don't want to get into trouble). They have repeated fabrics. The pieces can be mixed and matched. It has a consistent feel, colors, and look. Each piece looks like it belongs. You could even say it tells a story. Can anyone else see it?
What about the Bold Batiks collection for girls. Do you see the same types of things?
What lines are out there that you like? Post links in comments.