We possess the ability to differentiate different sound sources from a very young age. It's amazing to see infants showing preference to a familiar word over an unfamiliar words (e.g. flower vs. daffodils). Our hearing sense is constantly receptive during our daily routine; therefore, infants and young children are stimulated aurally when they are awake. As they grow older, their little minds start to construct connection between visual objects to the relevant sound; and soon start to lable them. (e.g. cow = moo) Finally, as their short term memory develops, they'll be able to put into sequence the sound they hear.
When I come to think of it, aren't these the very skills needed when we appreciate a piece of music or academically speaking, properly analyse a musical exerpt? Our body tends to relax when we listen to a style that we are familiar with and it becomes more tense if we listen to a totally foreign piece. When we sit in a symphony concert, we can differentiate different instruments and able to label them; also, music listeners tend to analyse a piece of music in a sequential manner (e.g. exposition-development-recapitulation in a sonata.) These skills doesn't come within a day of practice. I always believe that if children are given opportunity to continue exercising their ears in music class, they will definitely grow up to be mature audience.
There are many good programs and resource out there for older children but I particularly like refering to BBC's Parents' Music Room for inspiration. Its information are simple yet very helpful for young parents, who have little or no music background, it helps them to get music education started in their very own home. Below are a few sites that I like, which I'm sure toddlers would enjoy too. Please click the links below the picture to access.
BBC's Little Animal Activity Center (Shockwave player needed)
BOBINOGS is another site that toddlers will enjoy!