I am reposting an answer (modified for you) as this is a question we get quite a bit in this forum.
The game can be played by anyone that knows their colors. As for your 2 year old, I would use "Free Play" mode where the hitting the keys generate the game objects, so no matter what they hit they are seeing results. It is also a great way to help teach her the colors, if she doesn't know them yet, but we have seen lots of 2 year olds playing the game, and anything that gets them having fun on the piano at that age and getting to know the keyboard is great.
I found this video online, and though he is not using the correct fingerings yet (in the game and the videos when he is ready) you can see he "gets it" and is enjoying himself on his first song. What a great way to start your music studies.
http://www.youtube.com/v/UY5LYuaBZl4&rel=1"
So, my opinion is that your daughter is probably ready or nearly ready to start, I believe their minds are growing so fast at this age that music can only help them and delight them. I personally love that age, their personality begins to emerge, they walk and talk, and now can begin to play music!
Enjoy,
Thanks
Chris