Successfully complete the indicated task to unlock the corresponding toy -
ATV - Talk to the mayor in Town Square. He will tell you about something he found in his garage and teach you how to make it.
Boat - Visit the Beach each day in the summer, and talk to the lonely man to the left. He will ask you to deliver a note. Take the note to Pamela (found near the umbrellas slightly to the right and below the man). Do this at least six different days, and the man will teach you how to craft a boat.
Costumes - Talk to the clothing designer in the Commercial District each time the season changes.
Halloween Costume - Unlock the Battleboat game, and show it to the kids. Then, talk to the clothing designer in the Commercial District.
Hover Skate - Give Vanda a stuffed Oscar dog on Valentine's Day of Year 3 to get the plans for a Hover Skate.
Radio Controlled Car - Unlock the Battleboat game, and show it to the kids. Then, talk to the mayor in Town Square.
Sound Bomb - Get all the cookies from Rosemary. Before Christmas, a musician will appear in Town Square for a few days. Talk to him, and give him some cookies to get a cassette tape which unlocks the Sound Bomb.
Stuffed Dog - Talk to Rosemary in the Residential District at the start of each season. Accept her cookies every time they are offered. After the third batch of cookies, talk to her again.
Gunda - During the summer of Year 3, talk to the visiting traveler in Town Square. You can buy the plans for the Gunda robot for $1,000.
Valentine's Day - Give gifts to Vanda for at least two years in a row.
Yupii - After making one of the board/multiplayer games, talk to the two children that live next to you. You can find them in the Residential District during the spring or fall, on the beach in summer, and in Town Square in winter. Allow them to play your game. After making all five of those types of toys and having them play with them, they will give you the plans for the Yupii game.
You only have three dragons at your disposal, so don't waste them unless you're really flummoxed.
In the defence levels, bombs that you shoot down too close to your castle will still do you damage, so take them down quickly.
Pay close attention to the ammo type you're using and the structure you're attacking - most can be taken down with a single correctly placed shot.