I’ll let @G_Rayn handle your Q on thumbnails, but on the movies question from “apple services”…are you referring to movies you’ve purchased and downloaded from iTunes?
If so, unfortunately, Apple restricted the ability to play DRM-protected content (such as iTunes movies) on all externally connected storage devices a few years ago. The only videos that will play back in the My Cloud app are those that do not have DRM/copy protection.
One option for your movie collection, though, is to download the SD resolution version of the videos to your iPhone/iPad (I believe you can do this by adjusting the “Playback Quality” in the “TV” settings on your iOS device, or by un-checking the HD option in the “Downloads” section in iTunes on desktop). This should help save some space but still provide quality entertainment for your kiddo.
To save on space, you can also copy off your phone or tablet’s current camera roll to your My Passport Wireless. This way you still have everything with you, and you can still access everything on the go, but you can free up some space on your iPad (just make sure to have another copy of your photos and videos at home!)
Probably not the answer you were looking for, but hopefully it helps a bit.