Main Street Electrical Parade at the Magic Kingdom. And it is by far a favorite of the kids. The parade includes all of your favorite characters and lots of lights. In fact, I recommend going to Amazon (use the link on the left) and buying lots of glowing and light up items in advance of your trip, or you'll be coerced into buying the expensive Disney items that they bring around to sell on a cart right before the parade (and these will cost you minimum $20). But the most important part of having a magical time while watching the Main Street Electrical Parade is finding a great roomy spot for viewing.
Let me first tell you, just avoid the castle hub- which is the circle around the front of the castle. It's just too crowded and not that great of a spot anyway. Main Street gets pretty crowded too. Our favorite spot is right in front of the Hall of Presidents in Liberty Square. There are trees in brick planters and the brick walls of these planters make for a great seat for the adults.
We always plan to get there with plenty of time to spare just to ensure we are the first ones there. It's nice to have some sort of game or snacks packed to keep the kids busy. Then we send one parent to go get dinner or snacks. I recommend Peco's Bills for dinner or Storybook Treats and/or Sleepy Hollow for snacks. Then bring the food back to the seating area, and relax and enjoy the food while you wait for the parade!
See how we are front row?