Oh, I felt no regret/remorse/sadness when I passed it on. It wasn't a loved/favorite toy. If it was I'd have struggled. That said, I have a lovely friend who passed on some of her beloved DC's toys to TS. She said she passed quite a lot of them to local volunteer run tots groups but the special toys (the ones that were much loved/played with constantly) she just couldn't and has passed some of them on to Toddler. She wanted the toys to go to a home, not a hall, where they would provide as much joy as they did in her home. And to be fair, the toys she has given us (we received them over Christmas, so already at a disadvantage given the time of year) have been well received and regularly played with. I have told my friend when TS outgrows them I will do the same find a home where the toys will be cherished and not dumped in the tip or the charity shop--. The friend's DC is nearly 10 and while sad about giving Toddler her toys, understood that she had outgrown them and never played with them any more and loved showing all of the pieces to TS and telling me about the games & stories she made up when playing with them. It made the little girl happy to know her toys were being played with again. (And I had TS paint a picture for her and I wrote her her own thank you note for the toys which she just loved being treated as a grown-up and as someone who had the choice of sharing her toys.)
Certain toys, like Bunny, will be kept forever. Other toys, like the castle that friend has given us, will be passed on to families. And the toys that just never get played with go to the toddler groups and children's centers. I am sentimental but I am a realist as well.