An 18 year old German citizen is visiting us in the USA with an ESTA. We would like to take her to visit both sides of Niagara Falls. If she crosses into Canada by land can she re-enter the US without any problems? Will she need extra paperwork?
ESTA is not a visa, but an electronic passport registration needed to enter the US by air or sea without a visa.
And no, she will need no extra paperwork. At the US airport, she will simply get an entry stamp, which is valid for 90 days. Meaning, when she comes back from Canada byland, she won't even get a new entry stamp, they'll just look at the passport and existing stamp and wave her through.
(pro tip: as a German travelling visa-free she can use the automated passport kiosks at most US airports, called APC, which allow for quicker processing)