I watched this movie in the early 90s, but it could be older. I think the kids got transported to another fantasy world with bright colors and puppet characters. The lady was maybe their nanny or babysitter. I think she wore a red crazy outfit. I think there was a dog that had a magic stick with sparkles that would take them from place to place. I remember lots of fictional scenes and puppets with bright vivid colors. It may have been a tv series..
Looking back, it was kinda trippy, but as a kid it was magical.
I have always wondered what this was called and would love to see a clip again.