Santa brought these wooden magnetic dolls (pretty much paper dolls) to the kids for Christmas, and they come with so many outfit and accessory options as well as a male and a female doll. Alone they are a great toy or gift for someone. We have a regular set, as well as a sports set.
What I do during school time or reading time, while I read I give the dolls & pieces to the kids. As I read they dress the dolls and "act out" the scenes in the book. This has been such a fun & interactive way to really evaluate what they are comprehending as I read. For my kids, it really brings a story to life, but for me, it leads to great discussions about what we're reading, what they may or may not understand, and character issues. I'm so glad that this activity serendipitously fell into my brain. I highly recommend trying this with your toddlers to see what they are learning from your reading :-)