Yes, I agree you have to ignore the 'product' for now. The toilet roll tube rockets are for the future! A good craft session for a toddler involves smearing, rolling, prodding, stretching and mixing stuff. You can gauge the success by how much is stuck in their hair afterwards.
I live in a flat with no outdoor space so my suggestions are for indoorsy things. DD (20mo) loves playdoh - mashing it, pushing it through a sieve, cutting shapes out of it etc. She can cut out flowers and then stick different coloured middles in but frankly that's the only proper 'product' she can do at the moment.
Other big things are painting (brushes, fingers, bit of old bath sponge), crayoning (everywhere), sticking (fuzzy felt type things)... I tend to let her do her own thing and instead model the idea of creativity and art by making things in front of her. I built her a big cardboard house recently, sewed her a wonky teddy, made a few clay animals... all very bodgy but I like to think it's encouraging DD to make her own things too one day. In a while I think I'll try baking with her (cookies where she can stick the Smarties on, that sort of thing) but I know she's not really communicating well enough yet to enjoy it. DD has significant hearing loss in both ears so she's a little behind on following instructions etc.
I sculpt for a living but I remember a childhood of being compared unfavourably to my twin sister when it came to drawing and 'proper art'. This still gives me a fear 30-odd years later. A sheet of white paper terrifies me. I see the aim of kiddy craft is not for them to produce masterpieces but to become comfortable and experiment with all sorts of different materials, textures and methods regardless of the result.
If you have outside space, how about mud-pies, food colouring in puddles, bubbles... DD likes decorating things so maybe a bucket full of soil or a bit of empty garden which can be studded with beads, shells, stones, leaves etc...?