One one hand I am happy for dd to throw things like soft balls, small toys that won't break/break other things in the house, and very happy for her to throw balls etc in the garden. On the other hand I want her to stop throwing wooden bricks etc at other children and dd2. How do I teach her the difference between good throwing and bad throwing?

Just what you said - you can throw things that are soft, or meant to be thrown, but not ones that hurt someone else. In our house we have a rule that we don't throw hard things. Up to you how you enforce it.

I do remember ds1 being somewhat confused though when he threw a soft toy at my mum and she shouted at him about it. He burst into tears because he was so scared, and I personally thought she had been overreacting somewhat. He was about 2 then.

He's 6 now, ds2 is 4, and I hope they understand about looking after their toys and other people. If they start throwing around their cars, for example, I explain that the cars might break. Then if they throw them around any more I say something like 'obviously you don't care about looking after these cars, so I will take them away next time you throw them around'. Similarly anything that hurts anyone else is definitely disapproved of and will result in the perpetrator being removed for as many minutes as their age in years.