At 20 months, my daughter isn't quite going to grasp the whole Christmas thing this year, but she's big enough to be told the story of Christmas (over and over again) and to get all hyped about Santa (by being told about him over and over again).
To help prepare her for the holiday, I ordered the Little People Nativity Scene, which is perfectly sized for her hands and cute enough to hold her interest. I'm going to set up the manger part of it on December 1; then over the course of advent I'll give her a couple of pieces at a time to fill out the nativity. I bought a glittery red bag to use as the Advent Bag; each morning, she'll get to pull a little treat or a card about the day's activity out of the bag.
For little advent gifts, in addition to the nativity scene pieces, I got a few age-appropriate books about Christmas (What is Christmas?, The Story of Christmas and Where is Baby's Christmas Present? -- all of which will supplement our existing holiday reading collection, including the Grinch and other perennial favorites). I also got a set of unbreakable ornaments for her to hang on the tree.
Other advent activities will include putting up our tree; going to see the Rockefeller Center tree; going to see the Lincoln Center tree; going to see Santa at Macy's (or some other mobfest); and going to an abbreviated, hour-long performance of the Nutcracker, aimed at the littlest little ones.
What about you -- any fun Christmas ideas or traditions for toddlers?