I got the idea for this activity from a wonderful blog that I follow. You can view the blog here: http://www.chasingcherrios.blogspot.com/. This is a great activity to improve manual dexterity, improve fine motor skills, and prompt your little one to problem solve. All you need is plenty of rubber bands or hair ties and a door knob. Ask your child to put all the hair ties on the door knob. Then have them take them all off. Both actions require very specific and different finger manipulations. You can expand this activity by having the child put them all on his or her wrist or ankle (again very specific and different movements). If you have two children, make it a race to see who can put the most on or who can put them on the fastest.
This kept my two and three year old entertained for a good ten to fifteen minutes. It was interesting that both of them thought that the activity would be really easy, but upon attempting to put the hair ties on the knob, they quickly discovered that they had to manipulate the tie in a very specific way to get it over the knob. I definitely saw their minds working as they worked through this activity.