Police have not ruled out that William Tyrrell could have been abducted by a relative or associate, the inquest into the missing boy has heard.
But police have established his biological parents were both in Sydney on the day he vanished at Kendall in northern NSW on September 12, 2014.
"Investigators have not drawn the conclusion that no relative or associate was involved in William's disappearance," Counsel assisting the inquest Gerard Craddock, SC, told the hearing.
"After the disappearance, police acted very swiftly to find the (biological) parents.
"There is no doubt both were in Sydney ... on the twelfth."
Craddock told the court that before William was taken from his birth parents into foster care the Department of Family and Community Services officers arrived to collect him and found he was gone.
That was on February 8, 2012, and a warrant was issued for the arrest of William's birth mother.
"William was located by the NSW Police with his parents ... at a relative's house on 15 March 2012," Craddock told the court.
William was taken into the care of the FACS minister and given to the foster parents he was living with at the time of his disappearance.
On the morning William went missing, the inquest heard, William's foster mother spotted two "aged and unkempt" cars parked closely together across the road from 48 Benaroon Drive in Kendall.
The foster mother saw the cars twice, which in the remote street where her mother — William's foster grandmother — lived, was an unusual sight.
The house where the foster grandmother was visiting with her daughter and William was like all other huses on Benaroon Drive, set on large blocks where visiting cars usually parked off the street.
And that part of Kendall was a "sleepy village".
Craddock gave a dramatic account of how the morning William disappeared unfolded.
He said William's foster parents had decided to go up to Kendall to stay with her mother a day earlier than planned.
The foster father had a telephone conference meeting that required "a bit of quiet and a decent internet connection", and that would be difficult driving with "children in the back".
After arriving on September 11, 2014, the following morning William and his sister woke early around "six or seven ... excited to see Nanna".
Although William had worn his favourite Spider-Man suit several times, it was the first time he would be wearing it in Kendall.
The last photograph taken of William, at 9.37am on the day he vanished, shows him dressed in the suit "roaring" like a tiger, Craddock said.
The foster mother saw the two cars parked close to one another in the street just before her husband drove off to have medical prescription filled at the chemist and his conference call meeting in a place where he could get internet reception.
On the way home, he sent a text message to his wife via Siri.
At the house, William and his sister were enjoying playing and drawing on the back veranda, and riding their bikes in the driveway.
The foster mother "took William for a walk among ... trees between the house and 30 Benaroon Drive".
She tried to get William to climb a tree with low branches, but "William thought it was too high" and he got back down on the ground.
At this point, the foster mother again saw the old parked cars across the road.
She also has "a distinct recollection" of seeing another car drive up to 52 Benaroon Drive, then reverse and disappear, Craddock said.
The time was "close to 10.30am. William was playing a game pretending to be a daddy tiger.
"William was ducking to the northeast corner of the house and then rushing out and roaring at the ladies," he said.
"They were drinking tea."
The foster grandmother had "thought William was being very boisterous and loud", but the foster mother had replied "he's a boy, that's just how they are".
Minutes later, the foster mother "had just finished her tea and ... she noticed it had "become quiet, too quiet".
"There had been one loud roar and then nothing," Craddock said.
She called for William, but there was "no response", and she went looking up Benaroon Drive for his red Spider-Man suit among the green foliage up and down the street.
When her husband arrived home, she asked him: "Is William with you? I can't find him."
A video of a walk-through by police with the foster father in the yard around the house where William went missing was played in court.
He can be seen showing the detective various fences that he thought William could have got through and others that he couldn't have.
"He does know his limitations," the foster father says in the video.
"He could walk straight under here," he says at a low fence.
But at a higher fence, says "he's not going to get under this, it's too hard ... he's not a wanderer".
The foster mother went out along the street and neighbour Anne Maree Sharpley came out to help search.
At one point Sharpley hugged the crying foster mother, saying "breathe, it's okay, we will find him".
Sharpley saw the foster father "running around the bush calling out 'William' ... 'he looked scared, lost, worried'".
At 10.56am, the foster mother dialled triple-0.
The call, which was played in the court, begins with the foster mother saying, "my son, he's missing, he's 3-and-a-half".
She then says, "we have been looking for him for about fifteen or twenty minutes" and gives a physical description of him, including that he has "a freckle on the top of his head if you part it at the side".
She tells the triple-0 responded "it's the first time" William has run off.
Craddock told the court that statistically, according to US research, "74 per cent of children abducted and murdered by a stranger .... (are dead) within three hours".
But he said "it hasn't been determined ... that William has been abducted by a stranger, that William has been dead or has been murdered".
He said missing children are not usually reported to police for about two hours.
But in the case of William, he was reported missing after about 20 minutes and the first policeman arrived on the scene by 11.06am.
By 12.30am, more police had arrived with search dogs, and drains, dams and waterways were being searched.
Craddock said despite the fact the inquest was investigating the "suspected death" of William, "there's no establishing that William is in fact dead".
He said it also had "not been established that William has been abducted by a stranger ... or is deceased".
"If it is the case that William was abducted ... it means a person snatched a 3-year-old from the safety of a backyard and that person remains in our community," Craddock told the court.
"Police suspected abduction early on."
The court also heard from FACS senior practitioner Catherine Alexander that William's case file did not record any "open animosity" between Williams biological and foster parents during visits.
Alexander said that "if there was animosity ... we would want it written down".
Former Salvation Army home care supervisor Benjamin Atwood was also asked by Craddock if he had observed in animosity and he said he had "no recollection" of any.
Earlier, William's biological father wept in court as the inquest into his missing son opened.
The father, who cannot be named, wept as he sat with his half-brother's arm around his shoulders in the courtroom.
Missing William's biological grandmother also wept as she heard Counsel Assisting the inquest, Gerard Craddock, SC describe the events of the morning William went missing.
The biological and the foster families of William Tyrrell sat on opposite sides of the court which was also packed with supporters for both sides.
NSW Deputy State Coroner Harriet Grahame welcomed William Tyrrell's families and friends to the court, acknowledging that losing a child "must be one of the greatest pains of all".
On one side of the courtroom, the foster parents — who cannot be identified — sat after being accompanied into court by NSW Police Minister Troy Grant.
They looked grim as they heard the triple-0 call made by the foster mother played in court, and details of the search for William as it became obvious he was nowhere in sight.
The foster parents were with William at his foster grandmother's house on the morning the three-year-old vanished from the NSW Mid North Coast town of Kendall on September 12, 2014.
William's biological mother is due to give evidence later this week.
Paul Savage, the neighbour who helped in the search for William, is also due to give evidence.
William's disappearance sparked one of NSW's biggest manhunts for a missing child.
Strike Force Rosann was set up to investigate, but no trace of the boy has ever been found.
Deputy State Coroner Harriet Grahame will conduct the inquest at the Forensic Medicine and Coroner's Court Complex at Lidcombe, in western Sydney.
A massive brief of evidence, containing at least 15,000 items, will go before Grahame.
The first of two weeks of hearings will explore William's foster and biological families, the period of time around the disappearance and early parts of the investigation.
And, according to The Sun Herald and the Sunday Age, the inquest will focus on a new person of interest — a man who has never been publicly discussed by detectives.
Throughout the investigation, William was referred to "a little boy lost" but police soon came to suspect something more sinister happened and zeroed in on known paedophiles and criminals from nearby holiday towns.
But no one has been charged for the suspected abduction.
It is understood investigators hope the first week of hearings will show William did not wander into nearby bushland but was, instead, snatched by a predator.
In mid-2018 they conducted a large-scale search of bushland near the Kendall home to rule out misadventure and firm up their theory.
The closely-guarded persons of interest list, which ballooned to include hundreds of names over the years, has been whittled down for the inquest's second sitting in August.
Some names on that list have been previously released by police but sources say one so-far unidentified person will be watched closely when they are called in front of the inquest.
Counsel assisting Gerard Craddock SC will deliver his opening address at 10am on Monday.