I used to prosecute CPS cases here in Ohio. CPS cases are a part of my docket these days. I've seen things that still break my heart to think about to this day. I've attended a couple of autopsies related to this work, including a little girl whose face will never fade from my mind, and the little gold earrings she was wearing. And, I've also said no to CPS. Told them I would not file for a removal order in cases that didn't warrant it. And I've denied some requests since I took the bench.
I don't know Maryland law. But, here in Ohio, CPS cannot take possession of a child (custody is a legal term I'm avoiding on purpose) without a specific court order authorizing that action. CPS does not have authority to simply take a child. Interestingly enough, there is an antiquated provision of Ohio law which authorizes an LEO to take possession of a child upon reasonable belief that the child is in imminent risk of harm, and deliver the child to juvenile court or the CPS agency. So, I guess in theory this could have happened here as it did in the OP. That said, the Court would still need to issue an order to keep the child in the custody of CPS once the police handed off. Unless the children were returned, as happened in the OP.
Now, with all of this said, I have written an order for unsupervised children out on their own. Big difference being their age of the kids (younger than six) and other factors (like a toddler walking down the street naked, a four year old out in the snow barefoot without a coat, etc.)
CPS is not the evil entity many people think they are. Right now, our stats from 2014 show that 80% of the CPS cases we had involved severe substance abuse by parents, 40% involved domestic violence, 35% involved physical abuse, 10% involved sexual abuse. None involved kids playing down the street from home. Cases like the OP get lots of attention, and everyone yells and screams about how awful CPS is, and we get legislators sticking their noses into court to see how we can reign in these people who are out destroying families for no good reason, only to have them see that (1) there's more to the story than they thought, or (2) the system actually worked as it should, and if there was no reason for CPS to be involved, the court sent the kids home.
Is this case bad. Yes. Are there others like it. Sure. Are these a sign of a broken system that needs fixed and/or removed. No. Not yet. And not if the guys and gals wearing the robes keep doing their jobs right.