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Asking this question is like asking "How do you learn best: through direct instruction or by exploring on your own?" You would probably say that both are important for learning, right? The same is true for babies and toddlers. Both structured and free-form play contribute significantly — and in different ways — to your child's development.
Structured activities help introduce children to new ideas. Showing a baby how to stack toys (rings are a great example) can teach the concept of bigger and smaller, as well as sequencing. But to truly master the ideas, your baby needs to explore what happens when she tries different stacking combinations. She can benefit from both observing you and from exploring on her own.
More important in the long run is that children get many opportunities for play and that adults do not get too involved in managing that play. Although demonstrating new ideas to children is fun, your child should be able to decide what she wants to do with the information. For example, those same stacking rings can also be used as doughnuts for dolls or as something she can load into a dump truck. Children use play to help them better understand the concepts and ideas that they find interesting. They are the best judges of how they should be playing.