At one of the resorts I go to, I have seen kids going around with what I can only describe as a towel/hoodie/robe thing. Basically I think it is for kids sun protection at beaches, and is made of terry cloth i.e. towel material, and it is worn kind of like a hooded jacket. That way they do not have to be responsible for holding a towel when they go play, they just wear it.
It is long enough to cover needed areas when sitting, and the ones I have seen have some cartoon character or something like that on them to make them "fun" for the kids.
They seem to be a good alternate to a towel.
Stay Naked!
I remember my brother (who is no nudist) was sitting in a barbers chair when he was around 2 maybe 3. Towel or no towel, clothes or not, when nature called it called big and urine everywhere!. I remember him sitting in the car on the way home smelling of urine. So, yes, towels are good, but like everything, when it comes to kids, be prepared!
The sooner they get used to using a towel, the less reminding they will need. It will be second nature to them.
You use a towel partly for not getting whatever you are sitting on 'dirty" but you also use it to protect you from others that may not have used a towel.
Also, if you are at an outdoor setting, you have no idea how many birds, squirrels etc have crapped on whatever you plan on sitting on.
Stay Naked!