I've just had a 4th birthday party and we had some down time and some organised games (like the ones listed above). We were out in the garden and had a sandpit and a few other games out, but after about 20mins the kids were going a bit nuts and a few were a bit left out and some were a bit scared by how much noise some of the others were making just running around, so it was good to break up the time with a few games and tea. They also seemed to really love the games, especially winning stickers!
Last year, for a 3rd birthday party, there were fewer kids of different ages (family rather than nursery friends) and except for a game of musical statues, they were happy just milling about, playing with a few toys and being in the garden. So I think the age range probably makes quite a difference.
They enjoy games which are quite quick and don't have a winner. Ds likes what's the time mr wolf, musical statues (if you want winners - you can call something out pretend to be a princess, best princess gets a sweet, then best horse etc, strangely they are all the best at something). They love a relay race if you have space and have only 3-4 per team. You don't need to do anything but you might find that a few games focus their minds if they get bored.
I think cheap decks of cards to play snap if there's an even number, and balloons. Balloons can entertain me for hours so I'm sure small children will be mesmerised. And plus as you're outside if any go astray and blow over a few streets you might have brightened another child's day without even realising multi-use balloons!
Will any of the wee ones be being a teddy/doll with them? We did that when I was that age but I don't know if its allowed anymore, but they could tell the guests all about said toy. 'This is Pongo, I have had him since I was 1 and he is older than my best friend. He eat dust conveniently and sleeps in mine and dps bed. He also has a red collar and he likes cuddles with me and the cats.'
It might even be helpful to them with doing presentations at school. Fun and free and almost educational
for a rather small outdoor party for a 5-yr old (the guests are 4 & under). I imagined they would mostly be happy playing on the playground things and running around doing their own thing. I have a face painter, but I don't see many organized games really working much for this age group. But maybe I'm wrong?