The ToC will not be included in the ebook if there are no, well, contents in the ToC. You can remo0ve them by going to ToC tab in the Insepctor and remove all the referenced paragraph styles that define the ToC. Ditto with the glossary. If you don;t define any words it will simple not appear in the ebook.
If you do use the ToC, each chapter entry is based on the first page of the Chapter. Whatever image is there will be in the ToC. Navigation is not the same as a book. Play with a mockup a bit and you'll see what I mean.
There are a lot of built in features that make it possible to do things you simply can't do on paper. For example, you can have one image in the corner of a page, but when you clcik it it will grow to become a full page gallery with as many pictures as you wnat to have. And pictures can have captions, which in a way, is what a lot of children's books look like.
Also, FWIW, Sections are sub to Chapters, not the other way around. Wasted some time figuring that one out.
On the other hand, modifying templates is a snap. So creating your own can be done in minutes. iBooks Author is a natural for kids books, me thinks.