This is a fantastic activity for one year old toddlers. Sorting itself is so beneficial for development, and sorting colors helps your toddler learn to differentiate and learn their colors. It even works in some early literacy thanks for the labels.
You can purchase a 3 section tray like the one pictured above at Dollar Tree. They are GREAT for sorting activities for kids. All you'll need for this is that tray, and two different colors of water bottle caps. We had green and white. If you want to include the early literacy aspect with labels you'll need paper in colors of water bottle caps you're using, a Sharpie, and some scissors.
So, I made the labels. "Bottle Cap Sorting" for the title in the middle section. Then "green" for the green section, and "white" for the white section. Then I laid it out, as well as a bunch of white and green bottle caps (the reusing is very frugal and green). I demonstrated and talked about how the green ones went in one place and the white ones in the other.
My daughter got right to work and in no time she was sorting the water bottle caps perfectly. The odd few get to the wrong places at first when excited toddlers grab handfuls at once, don't worry about it! The learning is definitely taking place. You won't believe how excited your toddlers will be to sort water bottle caps.