Among my daughter's multiple medical diagnoses is a sleep disorder, which has been diagnosed by one of the top sleep specialists in the country. She's had many kinds of sleep tests, and we have received a great deal of education from the doctor and her staff concerning sleep medications and melatonin in particular. So here's my two cents on the subject:
Yes, melatonin is naturally produced by our bodies. Yes, many people take a melatonin supplement to help with sleep.
That's the good news. Here's the bad:
Our daughter's doctor cautioned against purchasing melatonin from, say, a drug store, or Walmart, or a health food store. In a national study, researchers analyzed dozens of melatonin products that are readily available over the counter, and they found alarming discrepancies in the pills. Some contained too much melatonin, some not enough, some varied widely from pill to pill in the same bottle. Some contained additives which are basically harmless to most people (sugar, or cinnamon, or a neutral filler). In fact she told us the one source she trusts, and it's Life Extension Foundation (NOTE: I DON'T SELL THIS OR HAVE ANY CONNECTION OTHER THAN BEING A CUSTOMER. I'm not providing a link, but you can look it up). Now, that is not to say that every brand of melatonin is bad or unreliable. You might get a good bottle from your neighborhood pharmacy. But the problem is, you don't know.
Anyway, what this means is that you have no idea about the reliability of the melatonin your daughter took or if it contained fillers or other substances.
The second piece of bad news is that this mother called melatonin a "chill pill". Children who learn to call pills other than what they are (drugs, medication, their actual names, for example) can easily be led astray when they're older and someone offers them Adderal in the school parking lot and calls it a "focus pill". Or "happy pills". Please sit down with your daughters and explain the importance of never calling a medication (whether it's a natural hormone or a controlled substance like an opioid for pain after an injury or a medication for ADHD, or insulin) by anything other than its real name.
The third piece of bad news is that melatonin can interfere with certain prescription medications. It can reduce their effectiveness, or block them, or increase the way they're released into the system. That mom potentially endangered your child since she presumably didn't know what medications your daughter takes, if any.
The fourth piece is that melatonin isn't just popped at bedtime. There are specific instructions, provided by a doctor or nurse, regarding how to take it effectively. Some doses are given 4 - 6 hours before bed, and some are taken an hour before bed. Some are extended or time-release, and some are fast acting. A sleep specialist or trained health care provider determines the dosage, and the timing of the melatonin supplement.
I would speak to the other parents. Your daughters sound healthy, but if another family's daughter sleeps over, and takes a prescription medication, a dangerous situation could occur. Just mention that the mom in question shares vitamins and supplements, and as a heads-up, they should advise their kids not to accept anything there, and that the supplements may be called by a seemingly harmless name, like "chill pill". This is potentially serious stuff. And of course, I'd prohibit any future sleep overs.
Another note: make sure you show your daughters how medication is handled in your house. Are they stored properly (not in a humid bathroom, properly labeled, dosed carefully)? Have a safety drill, and check expiration dates, child-proof caps, labels, storage. Keep score, and assign a point for every violation your kids can find. Quiz them on the names of any medications. And make sure to use the right names for every medication or supplement.