Final answer:
In the sentence provided, 'building' is a gerund because it is a verb acting as a noun, and 'decorating' is a participle because it is a verb that describes an action happening at the same time as the main verb.
Step-by-step explanation:
The sentence 'Children love building castles in the sand and decorating them' contains both a gerund and a participle. The term 'building', as used here, is a gerund because it is a verb that functions as a noun in this sentence. The action of 'building' is what children love, making 'building' the direct object of the sentence. On the other hand, 'decorating' is a present participle used to describe the continuous action performed on the direct object, the 'castles'. It adds detail to the main action, which is 'building'.
Learn more about Gerunds and Participles