Alveolar capillaries in children, gas exchange in the pulmonary alveoli. The pulmonary alveoli are located at the end of the bronchioles in the lungs. They collect in the form of alveolar sacs. They are surrounded by a whole network of alveolar blood capillaries. It is at this level that the gas exchanges during breathing are based. During inspiration, oxygen enters the lungs. It joins the bloodstream by passing from the alveoli to the alveolar blood capillaries to the cells. While the carbon dioxide released by the cells passes from the alveolar blood capillaries to the alveoli. It is expelled upon expiration. It should be noted that in young children, there is a much smaller number of pulmonary alveoli. So the lung capacity is less than that of an adult.