Here are a couple of questions: if you could answer them, you might get better advice.
1. What is the context of the child who is approaching you? Is he a neighbor? Do you know the parents, even just to say hello to? Is this a reading tutor/buddy from school? (do you see why I'm asking? huge difference in scenarios)
2. Why do you think the other kids in the neighborhood won't play with him, and do you think this has to do with him or them? They might be new and the neighborhood kids may be pretty firmly entrenched in their friendships. I've been the new kid a LOT (moved 14 times during my school years) and it is very hard to make friends sometimes.
Some kids will be more forward about 'just showing up', but that may be due to parents who just tell him to "go out and play", or they could be overburdened in another way. He could also be a latchkey kid. You should really find out. If your son is interested, you could have the kids play outside, supervised by you. Be firm with your family rules for all the children involved. (I have found that being pretty direct about what is/is not allowed has worked well, personally, as long as I'm matter-of-fact about it; not 'sugar-coating' the rules or not upset.) If you don't feel it's working out, then just be 'busy'.
My feeling, personally, is that if there were a larger group of kids playing of mixed ages, the age difference wouldn't be so glaring. It's a bit unusual for an older child to seek out a younger one, but we don't know the maturity level of this boy, either. In any case, if you choose to allow play, keep it highly supervised and out of doors in plain view. Heaven forbid this child's parents go out looking for him and he be in your house. In fact, I think it would be a great idea to have him walk you over to his house before any playing commences. This will be reassurance for both sets of parents.
Good luck!