There are lots of ideas, but first and foremost is keep it simple, with play value. Remember, a child's idea a fun running trains is different from most adults.
Some suggestions of things I've done:
-Place interactive accessories that need hands on cooperation near the front of the layout, easily accessible. Place continuous operating accessories, like the Lionel operating billboard (which changes from one sign to another by itself) or the rotating beacon light tower towards the back of the layout.
-Make sure you have some roads for kids to move cars and trucks. The Williams by Bachmann E-Z Streets might be worth looking into for added action.
-Make things movable for the kids to change their minds. I've take trees (the types with molded bases like the Lifelike trees) and glued them to a brown painted metal washer. the washer adds weight so the trees don't fall over, yet are easily moved from one place to another.
I've also taken styrofoam insulation board and cut it into various shapes, painted it green on the top and grey on the sides to simulate rocks, and buildings can be placed on these to give the flat layout board a little more depth. They can also be moved or removed if the kids want some change.
-Kids love to push buttons. I've wired operating track signals, like the Banjo Signal to a button instead of some sort of track activated trip. There's an advantage to this on a small layout that the signal doesn't turn on every short lap, but also the kids get to participate, even younger ones that might not be running the trains, can still activate an accessory.
-Action train cars are always fun. The spring dump cars are afforadable put stick with the log cars versus the coal. If the coal is accidentally spilled in the wrong place, it makes for a mess. The cure for this is I've used orange juice caps that are cut in half in place of the coal. Yes, the colorful cap load is a little unprototypical, but kids don't seem to mind and is it much easier to pick up that load if accidentally dumped in the wrong spot.
Also simple train cars, like flat cars and gondolas which are easily loaded are fun. Keep your eyes open when at the toy section of stores. There are many toys that are easily adaptable to your train layout. I took a farm tractor toy that had a trailer with an operating conveyor belt, adapted it to mount on to Lionel trestles, and now I have an afforable and popular with the kids way to drop a load into a waiting gondola. Here, the cut in half juice caps work perfectly. Small wood cubes (available at craft shops) work great too.
-Adults very typically want to superimpose their ideas of building the layout and running trains over the kids ideas. It should be a joint venture that is about both fun and learning. Like sounds and and slow train running are big with adults. One affordable idea for sounds is the MRC Sound Station, which I have. For one price of $50-$60 you get horn sounds, whistle sounds, crossing bell, engine bells, a conductor, rumbling sounds of trains on track, diesel idle sounds, etc. No, it's not on par with Lionel Railsounds, but it is very affordable and easy to install with push button operation... again a real kid pleaser. And when there's more than one child at the layout, it's a good thing to have multiple things each child can participate with.
-Simple speed control. Most of the newer current Lionel and RMT engines I have need a little more power to run than similar locos of a decade ago. But I still love the postwar Lionel 1033 transformer for being a perfect kid-friendly power source. The A-U and B-U settings to the track differ and can be changed easily to compensate for the power needs of the engine. A K-Line MP-15 or S-2 runs great on the B-U setting of 0-11 volts to the track. It will run slow and yet will not fly off the track. A newer loco or a postwar/MPC loco that needs more power runs fine on the A-U setting of 5-16 volts, which will make other locos like those K-Line ones, run like speed demons and potentially be flying off the train layout.
There are a few suggestions. There are certainly others. Check out www.thortrains.net for others.