I'm just a few years ahead and I've been the head coach. I think one of the major things, which I believe has been stated was to set expectations that its a recreational league and the purpose should be to have fun. I'm about as competitive as they come, and the only way my wife would let me coach was when I told her that my only goals for the team was
1) Have the kids pay attention and get a little better each practice
2) Have fun
3) Make it so that each kid enjoyed themselves and wanted to come back and play baseball again and hopefully I did a good enough job that they wanted to play with me again. The game is for the kids, when it gets frustrating (and it will) just remember that
I communicated these goals to all the parents of the kids on my team.
Stations are always a good bet, keep the kids as busy as possible as the attention spans are incredibly short.
Recruit as much help as you possibly can.
I always started each practice with a goal that we communicated to the kids(early on talking about having a good attitude, next practice giving great effort, etc)
Then we would run the bases (A HUGE goal of mine for the first goal, was to have every kid hit it off the tee, then run to the correct base) and baserunning drills
Then would split into stations
For tee ball my stations were hitting off a tee into a net (invest in a good tanner tee as somoene recommended above, they hold up, and I'd imagine if you wanted to sell it, you'd still end up in a decent spot, those things can really take a beating)
1) Hitting off a tee into a net
2) Fielding/Throwing drills (stat in a "baseball ready" stance, land the airplane by bending the knees, alligator the glove/hand, then hop on the skateboard to make the throw)
3) Working on catching balls in the air (just light throws maye 10 feet in the air from about 15-20 feet, increasing the distance based on ability). If kids are scared of the ball, try with whiffle and tennis balls at first until they are comfortable.
4) Then we would have group fielding grounders at pitchers mound, 2nd base and then throwing to a kid at first base to at least simulate what a game may be. I'd estimate at least 75% either went to the pitcher or 2nd baseman during games.
Make all of these a game (see how many in a row they can hit right back straight into the net without missing, how many catch in a row) Most kids respond very well when you make things a competition.
I was very up front with the parents on my team, I told them I would send out the lineup a day before each game (batting order and positions). In our teeball league, you would hit your entire lineup each inning. So I would also rotate the batting order moving kids up 3-4 spots each game giving all the kids a chance to hit all over the place. I wanted to send out the lineup so that if parents had any objections to their kids playing pitcher or catcher, I wanted to know sooner rather than later. Also, if they were going to play pitcher or catcher (5 year olds in full catchers gear is hilarious) I wanted them to know and be ready to take pictures and not miss that inning.
It was a really fun season, I had zero complaints and the kids got so much better. It's amazing to watch them grow and really have fun. Also, if you are in the field with them during a game, be ready for anything, and to also have some of the funniest conversations you may ever have.
Good Luck and have fun!