It's a nice setup. My kids get play dates without us having to schedule or drive anyone, and more often than not, everyone plays by the rules. That's the main point, of course. If you don't, you go home. (And no one, especially the kids, wants that.) Adults often stop by to chat, too, which is also nice for me; our backyard has become something of a neighborhood hangout.
It's simple enough: everyone needs to be having fun. If someone asks you to stop what you're doing, you stop. There's no disrespect allowed, and it's understood that kids listen to the parents of the house.
Other parents on my block also let kids come by to play, and each household (and yard) may have slightly different rules. For instance, we have digging areas. (We have kid-sized shovels, and there are holes all over designated areas where the kids are allowed to dig. They are not, however, allowed to dig where the internet wire is buried.) They stay in our backyard, the fence gates stay closed at all times (lest a chicken escape), and they know to keep indoor toys inside and outdoor toys outside.
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