General you need an oil to bring out the beauty of the wood and a wax to protect the wood.
I use mineral oil from the drug store (easy to apply and doesn't need to set up). Environmentalist tend to not like this oil as it is a byproduct of the petroleum refinement process.
Nut oils can also be used as long as the child has no nut allergies. Just make sure the oil will not go rancid over time (fruit and vegetable oils will general go rancid)
For the wax part many people use beeswax (not vegan friendly), shellac, or a varnish.
If you let most commercial finishes fully set up (when it doesn't smell like stain anymore, around 33 days for danish oil) they are food safe. Home depo even sells a spray lacquer designed as a clear coat for toys.