Motion
Consider the four types of motion: linear, oscillating, rotary and reciprocating. In most mechanical toys, mechanical energy is transferred from one type of motion to another. For instance, you might use turning a knob (rotary motion) to engage a lever (oscillating motion). Ideally, you want to convert energy through these motion types in such a way that the toy has a lot of results, or movement, with very little effort.
Safety
Make sure your design will not result in injuries. Although safety might seem like an incredibly basic consideration, ways that little fingers can get stuck in mechanisms or otherwise hurt can be overlooked. Make sure all parts intersect tightly where applicable, that any spaces that are necessary are of a proportion that makes entrapment unlikely, and cover any sections that might snap or cause shock, such as spring-mounted hinges or electrical motors.
Age
Decide what your target age will be for the toy. For example, if you are making a toy for a toddler, any handles or knobs should be quite chunky so the toddler's little hands can grasp them more easily. If the toy is for an older child, you can make handles or knobs smaller because older children have motor skills that are more developed.
Durability
Make the toy out of something durable. Most mechanical toys are made out of wood or tin because these materials stand up to the abuse kids inevitably dish out. They can be manipulated easily with home items such as a whittling knife or a little bit of heat. Try not to make your design rely on "horseshoe nail" items such as tiny springs that would cause the entire toy function to fail if broken, and remember that smaller pieces wear out very quickly because of friction and stress.
Portability
Don't make the toy too large or heavy. If a child really likes a toy, he'll want to carry it around. You can lighten the toy by using wood and tin frames instead of solid wood and metal chunks. If possible, use simple assembly so it can be taken apart to fit in a bag or backpack.