We watched it last week with my 2 1/2 year old and she did just fine. The music/soundtrack is very happy and upbeat. The fireworks are loud, but they are very high, so they aren't too intense. We were standing about 1/2 way down Main St.
We saw Illuminations the night before and when it was over, she said "that a little scary." However, Illuminations is much more intense- the music is heavy, there is a lot of close fire, and the fireworks are much lower and louder.
Unless your toddler is especially sensitive, I think you'll be fine.
Enjoy your trip!
Leslie