Sounds like a wonderful idea! Magnifying glasses to study the bugs...and then maybe draw pictures and color them and write up a brief description or story about them?

I have a little fairy garden for my nieces and nephews. It's really a butterfly/bee garden with some cute accents, but maybe it will give you a few ideas. It's always fun for the kids to create stories about the fairies, too :)

Fairy castle (found at Lowe's clearance aisle LOL)

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A little birdbath is always nice, too.

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Bee balm (especially this red one) brings in hummingbirds, which the kids love to watch.

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Maybe create a table and stools that look like mushrooms? Best of luck with your garden!