When Hope was one we gave her a cute little resin nativity scene complete with stable and all the figures - last year Hope became strangely attached to it.
She carried them around the house, tucked them in at night by laying them on their backs and saying "goodnight Mary, goodnight Joseph, goodnight kings..." and so on. She rocked the baby Jesus figure in the crook of her arm and played with them until the angel had only one wing, the cow had no horns, and the shepherd's crook was broken.
This year, there is an additional level of humor for me since her imagination has developed quite a bit. The characters talk to eachother and I couldn't help but laugh when I heard this today:
Shepherd: "Wisemen, what are you doing?!"
Wisemen: "We are bringing gifts for baby Jesus"
Baby Jesus: "Ooooooh! for me? I love presents!"