How could Almighty God limit Himself to the form of a man? And even if He did that, how could he possibly start as a baby? These questions are hard for humans to understand.
At the dedication of the first temple, Solomon said, "But will God in very deed dwell with men on the earth? Behold, heaven and the heaven of heavens cannot contain thee; how much less this house which I have built!"
(2 Chronicles 6:18) How much less the body of a little child!
Part of the answer lies in the fact that God is a spirit (John 4:24). Spirits are not limited by time and space. In Jesus' spirit, He was the eternal God who created the universe. The physical body of Jesus was just His "earth suit" that He used to manifest Himself to mankind. All of Jesus' deity could fit inside that body.
Even though this is still hard to grasp, it helps us understand how Christ Himself can live in us as believers (Colossians 1:27). If all the glory of God could fit inside the physical body of Jesus, then all the fullness of God can dwell in us too (John 1:16).