Police and friends of the victim's family say they are traumatised, and students at the only school in the town are being counselled.
The accused — whose name, age and gender are suppressed — appeared in the Youth Court in Invercargill yesterday, charged with murder.
"This is a tragic, tragic event involving an 8-year-old child," said Inspector Mike Bowman, Area Commander, Southland.
"You only have to use your own imagination to know the trauma they [the family] are going through at this difficult time."
The alleged killer entered no plea and would return on November 19, this time in the High Court.
The Otautau community was shattered, said resident and gallery owner Pamela Hopkins.
She said when she heard sirens on Wednesday night she did not believe it would be "something like this".
Otautau had a school, one petrol station, a takeaway, two pubs and a handful of local businesses, mostly agricultural.
It was a close community where everybody knew each other and where people felt safe, Hopkins said.
No one expected "something like this would happen here".
"It is heartbreaking." "Because my gallery is in the main road, I have a lot of locals coming here and I have a good feel of [what] this little town is like.
"I'm used to seeing these kids walking around, riding their bikes — feeling perfectly safe."
Family friend Karl Jackson said the boy's father rang him on Wednesday night with the news of his son's death.
"He didn't know what to say last night, he just broke down ... he will never be the same."
He said the family were not new to the area, but had just moved to a new house in Otautau a week ago.
The boy was gifted at arts and crafts, he said, and was a "brainy kid".
"All his mates will be in mourning ... he touched every heart that he saw."
Bowman said police were working with a school in the area.
"That's really important, the children of that school will be extremely traumatised."
Several police personnel from Western Southland and Dunedin were involved in the arrest, he said.
Given the matter was before the Youth Court, Bowman said he could not comment in detail.
"This is a truly tragic incident and our thoughts are with the family of the child at this difficult time.
"Police, along with Victim Support, will continue to support them and the tight-knit Otautau community throughout the investigation.
"Police are not seeking anyone else in relation to the incident and wish to reassure members of the public this was an isolated incident."
Environmental Science and Research scientists were involved in forensic examinations at two houses, which would take at least two days, he said.
There was a hive of police activity in Otautau late on Wednesday night — around 11pm, after police were called to the area about 10.30pm.
Southland Mayor Gary Tong yesterday morning said the community was in shock. Tong, a former police officer, said the town was tight-knit.
"It'll be traumatic for the community. I don't know the full details at this stage but hearts and thoughts are with the families and those that attended the incident as well — they're all volunteers."
Two properties remained under police guard early yesterday morning, police said.
Anyone over the age of 10 can be convicted of a serious crime, and six children and young people were charged with homicide offences in the last year, Ministry of Justice statistics show.
- Staff reporters and Otago Daily Times
