The difference between keeping a toddler on your lap with and without a restraint is that with a restraint the toddler will be crushed by your body flying forward (that is if you only have a lapbelt as is common in most rear seats) and without the restraint the toddler will be unrestraint and become a projectile.
The only way to safely fly with kids is in appropriate/approved seats.
Other than that they usually enjoy it until the novelty wears off and they will just go to sleep.
Much is made of ear problems in descends and hearing damage/headphones.
Most kids don't tolerate earphones for any length off time.
My personal take is that if you have that much time and dosh that their hearing would become at risk you are probably going to be flying something fancy with a jet engine or two and pressurisation. So mine fly with headsets for as long as they tolerate them but I don't worry too much if they take them off.
The discos they will visit as teenagers are likely to do more damage!
