Wood is an ideal material for making a child's table and chairs; it is long lasting, natural and nontoxic. If you want the table to last through several children--or even several generations--of toddler use, then you should use a hardwood, such as maple or oak. You can also use a softer wood such as pine, but your furniture will be more likely to show dents or scratches.
You can build a simple table and chairs from standard sizes of wood such as 2" by 2" pieces for legs, 1.5" by 4" for support rails, 2" by 4" for corner supports and 1" by 1" for fillets. You'll need a 3/4" thick board for the tabletop and 1" thick boards for the chair seats. Use bolts and wood screws to attach the pieces together.
If you don't want to build entirely from scratch, there are stores, such as Ikea, that sell children's furniture that you assemble yourself. These may be made of wood or plastic.
For a cheaper and completely recycled material, you can also make children's furniture out of cardboard. Foldschool has free design plans for folding old cardboard into surprisingly sturdy children's furniture.
Most children's tables are approximately 24" high, and chair seats are 13" high. The surface area of the table can be as big or small as you like; it can be just big enough for one child to use, or it can be a large table where groups of children can work together comfortably. Consider the use of the table set, as well as the space you have available for it.
When designing furniture for children, there are several safety considerations you should keep in mind. Make sure that you round off all sharp corners and edges, especially on the outer edges of the furniture. You can avoid corners by making a round table rather than a square or rectangular one. If you paint or stain the finished furniture, make sure you use a nontoxic paint that is safe for children.
You can also add features that will make the furniture more useful for your child. For example, you can build cubbies under the table to store art supplies. You can make holders for cups on the top of the table. You can add a raised edge to the top of the table to prevent drinks or paint from dripping off onto the floor. You can also add a protective surface to the table to help prevent scratches.