I've got two kids, roughly the same age as your niece and nephew. For a while I thought along the same lines as you, and was perpetually trying to find ways to distract one so the other has room to grow. It took some hard lessons, and looking around and seeing other people struggling with similar difficulties; what i eventually figured out is that we tend to underestimate what the younger child is capable of because we tend to see them through the lens of "older vs younger".

Once i got rid of that lens, I was just about shocked to see how hard my youngest pushes himself to do the things his older sister is doing. He's doing things now that my daughter at the same age wasn't able to; and I wonder how much of that is a function of her capabilities vs limitations I imposed on her based on a series of assumptions.

My advice to you, don't differentiate too much; you'll be very much surprised by what the little one is capable of. It WILL take more than an attempt or two, but if you're able to stick through and watch how your nephew behaves you'll most likely notice some mimicry and very concerted attempts to be able to do what his older sister is doing. Sometimes he'll be successful and they'll both play/do the thing together. Other times, he's won't, he'll get frustrated, then he may act out; and on some occasions he'll just get bored and this is where you'll need to do some entertaining for a few minutes so he doesn't go right to his sister to try and get her to stop doing the thing he can't do (yet).

The side benefit of this is that once established, you'll be able to dedicate one-on-one time to each as you see fit without feelings of unfairness or one feeling left out. In essence, don't hold him back; pull him along and he'll push himself forward to match his sister.

Kids are people too, drunk people, but people none the less.