How preschool teachers and children spend their time in preschool sets the stage for child engagement and learning. To describe characteristics of environments and activities and to compare child engagement in indoor and outdoor free play, systematic observations of children and teachers were performed in 78 Swedish preschool units. Results showed that indoor and outdoor free play were the main activity settings. Children interacted as much with other children as with teachers. The content focus was dominated by non-pretend play, construction, art and music, followed by pretend play and academic contents. Child engagement was significantly higher in free play indoors compared to outdoors. Teachers engaged in varied tasks, but their central task was managing. Teachers were typically in proximity to small groups of children, or by themselves, and mostly talked to or listened to a single child. Findings are discussed in relation to the preschool curriculum and future research needs.