DD2 has a soft cotton square scarf - it's about 60cm x 60cm - in bright gypsy-type colours. She dances with it, it's wings, it's princess dress, it's something to hide under, a blanket for dolly, etc - it entertains her for hours.

In fact it was a handmedown from DD1 who had it when she was about 2 yo - and she played with it just as much, and for years. Best $3 I ever spent at the op shop.