I think parents get into the hamster wheel of wanting to provide what "every other kid gets" even if they don't know what that really is. I think kids get into the competition of doing what their peers do. I see it among my neighbors, and I see it all over Mamapedia, and all over the ads for the party venues. First of all, before the age of 5, kids don't really get what the party is. So having huge parties for 2 year olds is just a financial burden for the parents and a stress-fest for the child. Guest children have no idea why they have to give toys to someone else and not be able to play. Parents invite SO many kids (so as "not to leave anyone out") and then have the problem of 30 gifts. Now their child has to write 30 thank you notes (which he/she won't do), the guest kids have to sit there and watch an acquaintance open 30 gifts, OR, if the gifts aren't opened until later, the guests never get to experience the pleasure of seeing their gift enjoyed and appreciated. All of which makes a wrapped gift the price of admission to a party venue (bounce house, arcade, Reptile Adventure, pony ride, theme ideas and accessories, you name it). Just in case it's not enough, the host parents go into hock providing creative goody bags.
It's all a great boon to the party industry - toys, wrapping paper, balloons, favors, invitations, entertainment venues - but it's a huge burden on the budgets of parents. Moreover, it turns simple celebrations into spectacles. Kids don't learn to choose good friends because "everyone gets invited". They don't learn to do with less, but everything's about having more. They don't learn to be grateful. They don't learn to be gracious hosts or gracious guests. No thank you notes are involved, no expressions of gratitude (not just for the gift, but for the thought and for the friendship) are involved.
Some people think that, because people are having kids later, they aren't giving them the big weddings. They give the big grad parties and the big bar mitzvahs, and the over-the-top parties for a 4 year old. Others think that there's guilt involved for not spending as much time with our kids with 2-job families. There are structured after-school activities (another competition, but it can also be a question of supervised child care for older kids), and some misplaced desire to make up with quantity what we are unable to provide with frequency. Others think that having kids later means that people have more disposable income or are worried about not being around for 4 generations. I don't know. Maybe it's all of those things.
But I think we'll find that kids who are over-indulged with huge events for any occasion (baptism, birthday, confirmation, preschool graduation, and on and on) aren't really going to look back and feel they had a fuller life.