Scheme involves close to twenty exercises in which small children can lark about (7)
I believe the answer is:
Here is my best explanation:
'in which small children can lark about' is the definition.
Although both the answer and definition are singular nouns, I don't see how one could define the other.
'scheme involves close to twenty exercises' is the subsidiary indication.
'scheme' becomes 'plan' (I've seen this before).
'involves' indicates putting letters inside.
'close to' says to take the final letters (the close/ending of).
'exercises' becomes 'pe'.
The last letter of 'twenty' is 'y'.
'plan' enclosing 'ype' is 'playpen'.
(Other definitions for playpen that I've seen before include "device to capture the young", "Child's enclosure", "Baby enclosure", "Toddler's enclosure", "juvenile restraint", "Portable enclosure for young-child", "Limited room for amusement", "Nipper stuck here", "Enclosure for child" and "Portable enclosure for tots".)