Simple living doesn't always feel peaceful. 😅 I'm also a SAHM with what I would describe as quiet hobbies (reading, journaling, crochet, etc). My toddler provides plenty of chaos though lol.
With a 3mo and 2yr, you shouldn't be worrying about simple living right now honestly. You're in the thick of it. It's okay to just be in survival mode.
I imagine what you need is quiet time and a break. Do you have any family that can babysit sometimes so you two can go away for a while? Even a few hours is helpful. Does the toddler still nap? That is the time for one of you to also power nap, if possible.
The key is to simplify the house maintenance too. Some days the laundry and dishes will fall behind. That's okay! These days are gonna go by fast. I can go on and on about cleaning and organizing systems if that is something you wanna hear.
Toys for sure. Both my spouse and mother-in-law love to buy toys for my kid. I try to be understanding. They didn't grow up with much so to them, it's important. Thankfully, I've been able to declutter some and they're not excessive with gift giving.