Hi,
I don't post too frequently on here any more, but just popped on and wow - just had to reply to the "children don't need fantasy at 2.5" comment!
It really depends on the child!
My daughter is just over 2.5 - she's 3 next month, but the child lives in a fantasy world at least half of the time, and has for several months and there's nothing wrong with it, it's all of her own making - tell her the story of Rapunzel or Cinderella or Peter Pan, and she IS Rapunzel or Cinderella or Peter Pan or whoever for the next half a day, and assigns everyone else parts too! Every time she is with children who like the same type of play, she immediately initiates slightly more "day to day" but still imaginative/ fantasy /role play games (schools, doctors, mummies with dolls etc). When she was smaller I always encouraged her to be a bit of a "tom boy", wearing jeans and playing outside as much as possible - she still loves to play outside and is very sociable, also enjoys lego, and crafts, and other messy or practical things, but more than anything she loves stories and pretending!
A lot of children live in their imaginations, others never really go through that phase too much, but you can't say children of 2.5 don't need fantasy/ imaginative play, it's a whole huge area of there lives, that as somebody else said is a huge part of the way they learn all sorts of things, it starts around 2 or 3, depending on the child, and goes on for years!
My daughter saw a similar puppet show at Christmas, when she was 2 and 3 months - but it was performed at our Mama Kind group and they didn't turn the lights down. She wasn't scared, but it did go over her head rather and she was hard to keep still and quiet - didn't help that her German wasn't so good at that point. I think she might well be scared of a puppet show like that if the lights went right down etc. I came away with the impression it was more appropriate for school age children, as there was a lot of narrative, anyway.
Just my opinion, and experiences

) Hilary