My pleasure Sir. As my wife always says "nobody fell down out of the sky already knowing how to do ........."! So if you have any questions re terminology, just ask, there's plenty of real experts on here, not just "newbees" like me.
Re hand sanding, it has it's place of course, and for final finishing before painting/oiling/varnishing, it can't be beaten IMO. But it's also quite slow, and I find, rather boring!
The previous poster was dead right - having the right blade will go a LONG way towards reducing the amount of sanding needed. But it won't help much with "proper" regular shape/size round overs or chamfers.
Hand sanding is OK for that, but personally I find it difficult to achieve real consistency (the radius of the round over). I don't know the sanding attachment on the Dremel, sorry, so can't comment.
But I would GUESS that with the small sizes of a lot of toy parts, it would be difficult to get the radii regular, and to get into all the nooks and crannies. Whatknot's advice about emery boards (the things ladies use to shape their fingers nails) works well, and with practice should produce the consistency you're looking for. I use them quite a lot, along with "custom-made sanding boards" - i.e. odd scraps of flat, round, half-round, etc off cuts with suitable grit sand paper glued on to them. And (shocking to purists no doubt) I use small metal workers warding and needle files sometimes.
But again that can be quite slow, and for me anyway, somewhat boring, hence my use of the Trio "router" and bearing-guided round over or chamfer bits. I find that method fast and consistent.
HTH