Don’t fall for it. They’re no dummies.
Start establishing clear, firm boundaries at an early age and stick to it–even when it’s hard. It’s difficult for a young child to become familiar with your expectations and to learn appropriate behaviors if you keep changing the rules of the game. Even when they’re this young (especially when they’re this young!), it’s so important that they learn you mean what you say.
Set your boundaries; state them in an age-appropriate manner; and be consistent. Always.