Pick A Pocket or Two segment

He may have known what they were doing, but not that it was a bad thing to do, and illegal.

The thing you're talking about was a problem in the original book. Oliver is made out to be such a figure of innocence and purity that he doesn't know what's going on and so comes across as a complete annoying dope. Oliver's personality is why I think Dickens focused more on the other unsavory characters as the book progressed and seemed to have more fun acting out their roles in public. (He used to do public readings of his book, and it was said he didn't really become animated until he played the evil characters.) Fagin, Sykes, Monks, etc. are more nuanced and in some ways more human. Oliver is pretty much a plot device, where his only purpose is to be the naive, doe-eyed kid who never realizes what's happening more than half the time.