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Hodgeson explains KIDS to Lain in the similarly titled episode.

The KID System or KIDS System is a psychotronic device that harnesses and amplifies the power of children's latent psi abilities. It was created by Professor Hodgeson for the Kensington Experiment that occurred around 15 years prior to the present day, present time events of Serial Experiments Lain. After the Kensington Experiment's disastrous results, Hodgeson destroyed the machine and deleted its schematics, but the Knights of the Eastern Calculus somehow recovered the data. The original KID system used peripherals called Outer Receptors to collect the psi, but the Knights redesigned the system to work without Outer Receptors.

KIDS is the title and focus of Layer 06, when the collective power of the children successfully summons a giant image of Lain Iwakura into the sky, and the Professor discusses his experimental findings with Lain (as a metaphor of Lain researching the KIDS effect online).

In Scenario Experiments Lain, a footnote states that the Kensington Experiment was modeled after the Philadelphia Experiment.