We were there last year for Spring break, and our family had a blast. I just hope you get better weather luck than we had. Days before and after were all mid to upper 70's, but our three days were 50's and rainy.
I cant recommend a trip to Toledo enough. Take a guided tour. Our kids absolutely loved it there.
One of the tuk-tuk city tours is a really great way to see the city and get a broad overview of history and see the sights. The drivers in Madrid and Barcelona were awesome. They gave lots of good advice on where to visit that might be off the beaten path.
Prado is great.
We were there during holy week, so that was a really neat wrinkle I didn't plan for. Just watching processionals from our hotel was fun.
Bernabéu was awesome, we saw Brazil v Spain which was an added bonus.
Otherwise, simply walking around the city (or using subway) was great. We would just stop into restaurants and get a bite to eat or drink and continue on.
You will have a blast.

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I was in Madrid almost 30 years ago and loved it, but looking for recs for kids (who won't be as interested in art and architecture as I will be. as of now, we are going to a Real Madrid game and I'd like to incorporate the Prado and Reina Sofia art museums, but we're open to any and all suggestions beyond that, including day trips or overnight trips via train from Madrid.
Thanks!