Ubiquitous computing (ubicomp) and the Internet of things (IoT) are turning into everyday household technology at an ever-increasing pace, for example, in the form of connected toys. However, while ubicomp and IoT are changing and shaping children's digital and technological landscape, not much is known about how children perceive these omnipresent and concealed forms of digital technology. This qualitatively oriented paper explores 3- to 6-year-old Finnish children's perceptions of ubicomp and IoT via interviews and a design task. Initially, the children were skeptical toward the idea that tangible objects, such as toys, could be computer and/or Internet enabled. However, these perceptions were subject to change when children were introduced to a scientific conception of what computers and the Internet are and asked to apply their knowledge to a technological design task. Implications for early years digital literacy education are discussed in the paper.