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One of the requirements of the EYFS has always been to observe children and gage their progress against the areas of Learning. Observation should tell you what stage your children have reached in terms of development and will help you plan activities to challenge their current capabilities. Parents naturally observe their children but in an informal way, and it doesn't necessarily lead them to challenge their children.
There are two key modes of observing children. The first, formal mode, is to watch them for a period of time as they play in their setting. Watch what they do, what they say, how they solve problems, and make a record. Doing this on a frequent basis will let you notice patterns emerging and help you plan progress. The other mode of observation is simply noticing particular moments that strike you as funny, special, amazing. Young children are constantly amazing us, perhaps they do something in the way that you do, or say something that you would nomally do; maybe they achieve something that you really didn't think they could do, a baby rolling over, pulling a cushion off a sofa, pulling themselves up to a standing position. Note these moments too and again you will see patterns emerging over time.
Using ToucanLearn's Daily Diary, you can keep a permanent record of progress and come back to it over time. If you are a childminder, share the Diary back with parents and that way they can log in at any moment and see how their child is progressing, and what they are doing.