Any nasal irritation leads to a reddening of the area around the nose. This can be due to having a cold or the flu, being allergic to something in the area, or just simply having the sniffles.
There could be several causes for your toddlers nose to be red, it could just be slight irritation/dry skin and then I would try putting some vaseline or some lotion on it to see if its just irriation or dry skin.
