When Andy Manley says "the whole shape of children's theatre in Scotland is down to imaginate and the individuals who work in it" he's not paying smarmy lip-service to the Edinburgh-based organisation just because his own work is part of their festival next week.

He says it because, like many other theatre-makers and performers, he can remember a time when shows for children and young people were clinging to the margins of arts provision across the country — rarely a priority when it came to funding, or being booked by venue programmers, and often assumed by those who hadn't faced an audience of volatile tots to be a happy-clappy easy way to get an Equity card.

Tony Reekie, Imaginate's director since 1996, tends not to look back — he spends much of the present caught up in future planning. But this is Imaginate's 25th anniversary season and memories — his own, and other people's — keep coming to the fore. "We've got volunteer staff with us this year who want to be involved because they saw some of our shows when they were kids themselves," he says, "and for me that's a kind of validation. Because the festival is all about giving young audiences the best-made, clever and inspiring theatre we can find. And when you discover that, one morning in May, an eight-year-old watched a performance that has stuck with them ever since... Maybe changed their understanding of the world, or the people around them, maybe even changed their ideas on what they wanted to do with their life — well, yes, it's like 'join the club' because that's more or less what everyone in Imaginate has felt and wants to share."

Any eight-year-olds who venture into A True Tall Tale — a Danish production that's coming to Imaginate — will certainly find their world view altered. Instead of formal theatre seating, the audience is invited to lie back in a hammock as the story of a forest adventure unfolds in projections overhead. "It's a kind of story-telling that encourages your brain absorb what's going on in lots of different ways," says Reekie. "You're listening to the words — but there are all of these wonderful visual images as well, and the feeling of being wrapped up in a hammock just seems to free up your thoughts. I think it's a wonderful approach to story-telling."

From overhead to underfoot, and an Australian show for the 4-8 age group called Saltbush. The clue is in the company name: it is Children's Cheering Carpet and this foray into Aboriginal culture and the actual landscape of Australia emerges when youngsters step onto an interactive surface and become part of the action. "Have technology, will travel" seems to be the motto here — when the Imaginate festival ends, this show will go on tour in Scotland.

"We simply didn't have these resources when the festival started out, " says Reekie. "I tell people over and over that really it is the artists who drive things forward. They are the ones who stay curious, experiment with different media, connect with the communities and engage with their feedback."

He explains: "Twenty-five years ago, the norm seemed to be that artists huddled away in their little ivory towers, made work — often with the intention of educating, maybe more than entertaining young audiences. They'd bring it out to the grateful masses and then dive for cover again. Not all artists behaved like that of course, and I'd like to think that at Imaginate we've been able to help them develop not just in the making of work, but in the showing of it in a much more outgoing way. I love it when we can take a piece of story-telling, or more frequently nowadays, a home-grown dance piece, out to Craigmiller or North Edinburgh Arts Centre and help artists to build relationships with the communities there."

Andy Manley would unstintingly second those notions. His new work for two to four- year-olds, A Small Story/Eine Kleine Geschichte — the twin title reflecting the Scottish/German collaboration masterminded by the Edinburgh-based Starcatchers — has emerged from a process of direct engagement with tots and toddlers that has not always been reassuring, but helpful.

"There have been some very bruising moments," laughs Manley as he explains that he and his German collaborator, Ania Michaelis, had sketched out a scenario where everyday objects would bring the story to life, not human actors. "We had this idea of drawers and boxes opening up, and maybe a jug or a door-knob making friends with each other, falling in love even - very little text, but structured rather in the way that when children play, they make-believe that objects can be whatever they want. But then this group of German four olds objected very loudly. We'd put glass and wood together as 'friends' — and they all said 'no! glass goes with glass, wood goes with wood' so we had to find other ways to make the piece work — but we'll find out at the Tron, and the Traverse, won't we?"

Manley, whose award-winning show White has now toured the world, reckons that any theatre-maker working in the children's sector never really steps off their learning curve. He vividly recalls when Imaginate sent him to fact-find in Denmark. "I saw two shows for very different age groups, and it was absolutely a game-changer for me. Out of that one trip, I got the inspiration — the confidence — to do My House and Pondlife McGurk: they'll go to LA in June.

"I suppose what Imaginate does is reminds us all — audiences and practioners — that we have this thrilling art form that is special and different: live theatre. We need to value it. Kids who saw White in Los Angeles loved the show — but they said 'that was a really great film!' because film, not theatre, is all they know. Imaginate has helped us develop an audience that knows what theatre, and dance is — and there are companies down south who look enviously at what we have here because of Imaginate."

A Small Story is at the Tron, Glasgow today and tomorrow. www.tron.co.uk The Imaginate festival is in Edinburgh from Monday 5 - Monday 12 May.

Details of times, venues and tour dates on www.imaginate.org.uk