My children like to give gifts to each for Christmas, and we are happy to encourage them in that activity. They usually request a bit of assistance, whether it be coming up with ideas or taking them shopping.
My oldest daughter likes her gifts to be handmade. Last year she made hand stitched stuffed animals for her sister and brother. She spent a lot of time, and the gifts were all received (read my husband’s post about that exchange of gifts).
After some discussion, this year she opted to make a travel Lego kit for her 4 year old brother. She gathered Lego pieces from our collection, printed and colored and laminated and cut the pattern cards, and packaged them in a nice tin. The inspiration and pattern templates came from Fun At Home With Kids. Sometimes our large stash of Lego’s can be a little overwhelming, so having them broken down into a little set is perfect for our little guy. Zach was very excited about his gift, and now he can easily build and play with Lego’s in a way that is tailored to his ability.
My seven-year-old Lily loves to do science and creative projects. When I saw this Science Kit for Kids from I Can Teach My Child, I knew it would be perfect for her. Anwyn agreed to help me get it ready for her sister. We printed the instruction booklet, laminated for durability, and then purchased the few items we didn’t already have on hand at home. This gift is the gift that keeps on giving, since it will allow for some quality bonding time in the future as we all explore the experiments. 
Lily and Zach opted to use their allowance money to purchase gifts. Lily knew immediately that she wanted to get a book for her big sister, and toy cars for her little brother. Zach had trouble knowing what to get, so we took him shopping and he picked out a Lego set for Anwyn and a battery-powered pet for Lily.
We allow our children to open these gifts on Christmas Eve. We want to be sure that the children feel the joy of giving, and that it doesn’t get lost in the excitement and shuffle of opening the presents on Christmas morning.
How do your children give gifts to each other?