Aww - this was the year that my 2-year-old daughter seemed to get the concept of the funny red man that gives you presents.
She was lucky enough to meet someone playing the role of Santa at three different little parties, and was really excited to see him (and get another little present) by the third time! Spoiled little thing!
Hehe.
At that age, they believe every gift comes from the red man.
No, shame - we try to make it clear that Santa gives the little presents, and the bigger, fancier ones come from real people (us or the grandparents, etc).
Otherwise, she will start to wonder why Santa is nicer to some kids than others!!