Fanny Bridge is a great spot to take your kiddos. It is at a fairly busy intersection but has a lot of things to do and see for families. The bridge itself is right next to the Dam and usually has tons of fish for the kids to check out. Just across a side street is Porter's Outlet where there is a fish food vending machine (for $0.25). And just a block away (next to the condos) is a great little beach called Commons Beach that has a fantastic playground and (for the most part) clean restrooms and an awesome view of the lake.
This is a great diversion that's easy. The dam itself is pretty cool to see, and if you look off the bridge into the shadows you can see some really big trout hanging out there. This is where the Truckee River starts, draining from Lake Tahoe. The dam works are visible through windows, and you can walk across the dam into a park where there are museums. The railings are mostly child-proof with narrow openings between the spindles, and the paving is in cobblestones. There was also a nice grassy hill my toddler son loved to walk around. We stopped for some soft serve across the street at the Dam Cafe. They have vending machines for fish food, to throw into the river. Great views on a sunny day.
I'm not sure what the museums are like or what admission is, but it was pleasant just to hang out on the dam and the bridge, and let my toddler run around.