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Preschool facilities in dense urban conditions with more plain open spaces and artificial materials put children’s access to nature at risk. In the transformation towards sustainable futures, children’s place preferences can be an important guide to the planning and design of outdoor environments where they can develop bonds and friendships with place, peers, and nature. Research has documented useful features for children at a preschool yard, but less is known about how children make meaning of the space, and the role of the physical environment for their development of sense of place. This study aimed to investigate favorite places during walk-and-talks in preschool yards with children aged 3–5 years old in a Swedish municipality. Field notes, maps, and photos documented how the children use and make meaning in the preschool yard. The results are six perceived space characteristics: sandbox space, artificial dwelling space, bushy space, woody space, borderland space, and temporary space. The results are discussed in the light of bonds with place, peers, and nature as formative of children’s place-identity and burgeoning development of sense of place. It suggests that more attention is paid to the general characteristics of children’s outdoor spaces as they are perceived by children, in addition to basic requirements for size and functionality.