Toddlers can use finger painting to start to explore forming letter shapes. Spread paint out on a table and let children experiment with touching the paint and spreading it around. Use your fingers to draw shapes and letters in the paint. Encourage toddlers to mimic your drawings by saying, "Look what I drew! Can you draw it too?" If you don't want to get quite that messy, cover the table with newspaper and give each child a piece of white paper. Drizzle paint onto the paper and let children create paintings.
Holding and pressing down on stamps help toddlers build motor skills. They'll also be able to see the shapes that exist in common things around them. Use cut-up dried sponges as stamps, or make your own out of fruits and vegetables. Cut celery and apples into slices, or make potato stamps by cutting potatoes in half. Use the sharp tip of a knife to cut a shape into the cut side of the potato, then trim away the extra flesh so the shape stands out. Children can use ink pads or bowls of paint to create designs.
Being able to use scissors is a skill children will need once they reach preschool. Give children plastic scissors made specifically for toddlers. Give them lumps of play dough to practice cutting. Once they've cut a piece of dough in half, paper will feel easier to cut. Put out tissue paper and construction paper and let children cut out whatever shapes they can. They can toss these scraps out, or glue them onto larger sheets of paper to make collages.
Combine sensory understanding with craft time by utilizing a box filled with sand, salt or rice. Let children first become accustomed to these materials by running their hands through the box. Next, give children sheets of paper and bottles of glue. Help children draw designs on the paper with glue. They can then scoop up materials from the sensory table and sprinkle them over the glue. When the glue dries, shake off any excess materials and view the finished design.