My kid has fairly free hands on the Internet -but I tend to be lurking in the background. He usually uses the net to look for cheats, pictures (wallpaper pics), play games, and search for when whatever game he is drooling after will be released..
We have each our accounts, mine is password protected, since I have the password to get online saved. He may use the computer when he is home alone, but no Internet. If he wants to use the net from his account, I have to type in the password.
The only settings he messes with is background and screensaver.