Upon turning 2, DS was somewhat afraid, but he just sat in our laps and hid his head through parts. No crying, and fine afterwards. Loved listening to the music after that.
At almost 3 at DL, and then at 3 1/2 at WDW again, he was fine, and enjoyed Fantasmic very much.
As somebody else said, you might want to sit close to the top for the first time, and try to sit near the end, if you think your kid might lose it.
Also, something that sometimes helps is to let them listen to the music before they actually see it, and explain some of what is going to happen. That way, there's an element of familiarity, which sometimes helps kids handle things.