I would suggest putting away any "special" toys to avoid freak outs, but otherwise, have the talk about how this week she is sharing toys and then next time it will be someone else's turn to share with her.
I do think it is nice to stick to one general area of the house if possible so that everyoen doesn't end up scattered. Especially with little ones, it can be annoying when you end up chasing your kid all over and don't get any mom chat time :)
As for activities, we have done it both ways, but generally our play groups don't have any specific activity. Usually we just play :) You could throw out some simple craft stuff, crayons, stickers, paper, etc., but I wouldn't worry about setting up anything else.
Have a great time!
I find that everyone gets along better when we play outside with few toys. The kids play with each other more than the toys then. Of course that doesn't always work if the weather is bad, or if there is no good place to be outdoors where you live.
The group I'm involved in isn't really a play group, more of a homeschool group, but maybe some of the things that work for us will be helpful to you too.
A loose routine or rhythm seems to make the parents & kids all happier. It can be as simple as gather > play > snack > leave, or more involved: gather > song > story > story-related project > snack > free play > closing circle > leave. Basically just something to help the kids know what to expect and make transitions easier.
From 10-12 I would personally prefer no snacks but most of our friends would want snack time and most activities we attend in that time range do include a snack. You can provide just some cut up fruit and cheese, or you can just ask the parents to bring snacks (either for their own kids only, or to share, just be clear about which!)
I prefer what happens when we put out minimal toys -- like one day put out all the play food & kitchen toys, or another day put out all types of blocks and building toys. The kids seem to work more cooperatively when there is a theme and less toys seems to lead to less chaos. Plus the host kid seems less possessive of their toys this way. But you could also leave all your kid's toys out, just put away any really special ones that she may have trouble sharing.
Outside playgroups work way better for us. Indoors, it depends on your house layout. We usually just let the kids spread out -- often they split off into smaller groups, or some kids will be playing loudly/roughly and others will want a quieter area. Most of the families do ask kids to stay out of certain areas (their bedroom, or the 2nd floor, or whatever). If you are doing more structured activities, it will be easier to keep the kids all in one room.