Have to say I'm a little surprised that CSM rated this "not for kids." Fable II isn't really about morality as much as it's about the social consequences of your actions; it presents them in very, very broad strokes but I think provides food for thought.
I also am surprised this game is rated so high for violence: I consider Arkham Asylum to be considerably more violent, yet that's rated T and approved by CSM for older kids. Yes, there is swordfighting and shooting and blood (though it's usually overshadowed by the glowing orbs that indicate XP) but as long as you are killing "bad guys" and not electing to take the safety off and kill an innocent bystander, I don't see this game as terribly violent.
This game can be played co-op, and is a great conversation-starter if you've got a kid who is ready to talk about sex, alcohol and other choices that have consequences.
For instance, if your character engages in extramarital sex, not only do you risk or an STD, you will also find that you can't easily get rid of your lover. If you dismiss them, they will follow you around crestfallen, or consistently bring up marriage or presents in public.
The sex itself is considerably more sanitary that sex on prime time TV, although it's interesting to see how it changes depending on your gender (another great topic; it's supposed to be a gender-neutral game but the male and female characters don't act the same and aren't treated the same.) Condoms are a common "prize" and to have sex, you have to choose protected or unprotected sex; unprotected sex can lead to pregnancy as well as STDs.
Once your character has a family, he or she will be expected to pay their upkeep and pay attention to them, whether or not you married your partner.
There are also characters of many different sexualities including one transgender/drag queen (hard to tell which) Some quests involve helping NPCs untangle romances, some quests deal with NPCs sexual preference (A farmer asks you to find a wife for his son, who turns out to be gay)
These issues make the game inappropriate for smaller children, but at a certain age this game can be a good jumping-off place to discuss how complicated sex can be.
Likewise, drinking will make you vomit and lose control of your body. There are lots of drunkards in the game who look pretty stupid; it's not glorifying bad behavior by any manner of means.
Your choices also reflect on your face in a kind of Dorian Grey sort of way: the more evil you are, the uglier you get. Evil acts tend to be selfish and hedonistic: eating meat and pie, drinking alcohol, overcharging, taking slaves.
You also have to make amends even if you do something wrong unintentionally: it's pretty easy to accidentally use magic or draw your sword when talking to a villager, but it takes a considerable amount of time to get them to stop running away from you and screaming - and if you need their assistance, you won't get it. You will also be shunned socially if you don't alter your behavior to suit your audience: prudes don't like belching, and free spirits get bored by polite gestures.
All in all, it's not a bad way to open discussion between you and your teen. If you don't plan to talk about it as they play, however, I think it is probably best to wait until your child is an adult.
Even the scarier parts of town offer a lesson: it's clear that prostitutes, thieves, assassins, and beggars are not living happily, and again is a good opportunity to discuss privilege and choice and the role it plays in offering life choices.
I recommend playing this game with your child or playing it through on your own and then asking him or her about different areas and scenes. I'm hesitant to put an age recommendation on this review, because it does require a certain kind of maturity from your child - some kids get there sooner, and some later.