I really like this toy. It's just challenging enough for my two-and-a-half year old. She can thread the circles on by herself, and she likes the cute sheep that it makes. You can fit them on in any order. For more of an educational slant, sometimes we try to actually do the circles in the order they're supposed to go in, in rainbow order (there are little color coded dots on each circle) if we are doing it together, but she can still play with it by herself.
My only complaint is that the end piece is really hard for a toddler to get on, and so she can't complete the sheep completely by herself. I would imagine that this part would be too hard even for a three-year-old.