Answer:
I am seen in the water. If seen in the sky, I am in the rainbow, a jay's feather, and lapis lazuli.
My children are near and far. No matter that I know where they are. The gift I give them make their day. But if I were gone they would wander away.
What is pronounced like one letter, written with three letters. And belongs to all animals?
I'm not really more than holes tied to more holes. I'm strong as good steel, though not as stiff as a pole.
Tall in the morning, short at noon, gone at night. But I'll be back soon.
You use it between your head and your toes, the more it works the thinner it grows.