If both parents of a toddler (or say child) die, what becomes of the kid? I'm assuming social services takes any orphaned kids, but is there any way the kid can come (back) to town once he's a young adult?

Or is he just going to be appear as a living toddler in my family tree forever?

I'm not too sure, but I think the toddler just disappears into an invisible orphanage. Unlike in TS2 where the most recently recovered child would be the next adopted one.

Yeah, but will the toddler age along with the rest of the town (and then once old enough, lurk in the cities)? Or will it just appear as an immortal toddler in the family tree?

well i for one have had immortal mothers and kids and grandparents once they moved out on their own for some reason and it lasted through every new generation on my family tree its a bit odd that my sim's mother is just as young as she is. she was old but then the next day im assuming when she was evicted or moved out of her own household she became young again on my family tree lol go figure