For the little little ones, I always removed the bottom branches (fake tree) and kept it hight off the ground, for infants this worked great because I would lay them under the tree and they could look at the lights but not ready the branches.
For the toddlers,I always just taught mine to not touch just like I did with other things in the house. I also put the delicate ornaments way out of reach at the top of the tree.
You could also set up a small artificial tree (2 ft tall) you can buy them at dollar general for 10 bucks or find them at goodwill or someplace, even jsut cut a branch off a pine tree in the woods and set it up, get a junk used fake christmas tree and use jsut the top pinacle branch and put it in a piece of wood drilled out for the base. Then have the daycare kids make ornaments and decorate the "tree" with them. Keep it in their play area, and let them touch it when ever they want, it's their tree. You could do an ornament a week, or day, etc. They could take them home the week before Christmas and wrap them up for their parents.
Just a thought. Actually, I might do this with my kids.