H Jason-
The Jungfrau region has a much wider range of available hikes and scenery than does Kandersteg.
However, for a short stay, all you need is one nice hike.
"Better" is not a very helpful term when describing sights and scenery, because everyone has their own preferences.
However, jokingly, many people say "bigger is better" or "more is better."
By that standard, Wengen and its surroundings are much better than Kandersteg.
Also, you have not given us any perspective on your skills and physical fitness for high altitude hiking with your daughter on your back. Are you well equipped?
By the way, although I am no expert on this, I have read that infants should not be taken to high altitudes. Arno and Annika have mentioned this; you might check with your doctor.
If you want to avoid the crowds and save some money near Wengen, consider not going up to Jungfraujoch in August. There are a lot more tourists riding the cog railway and cable ways than are out on the trails....."crowds" is a relative term.
I'm not a fan of one night stays, although in Switzerland, at least the travel between the places to stay is usually a pleasure in its own right. Standard advice for travel to the Jungfrau region is to allow more than one night. The weather changes rapidly and cannot be reliably forecast very far in advance. Id you go for sightseeing on high, you don't want to see only the insides of some clouds. There are a lot contingencies available near Interlaken if the higher regions are hidden by clouds.
Your trip is designed to cover a lot of different places for a short time in each one. You have laid out a logical route plan, and the sights along the way will be very nice. Many people like to do that, even while traveling with an infant. Purely as a personal opinion, I'd skip Zermatt and Kandersteg and add to the Jungfrau region and Luzern. I like to spend more time in fewere places. Of course, Luzern will be packed with tourists in August, and all the other places you mention will have lots of tourists.
For me, hat means doing things like a lake boat ride and a walk somewhere around lake Luzern, after a short visit in the old town. Any easy one is to take the boat to Vitznau, cog rail to Rigi Kulm, walk down to Rigi Kaltbad via Rigi Staffelhöhe and the rail out to Chänzeli, thenc eo Rigi Kaltbad:
map.geo.admin.ch/?topic=ech&lang=en&bgLa yer=ch.swisstopo.pixel karte-farbe&layers=ch.bav.ha ltestellen-oev,ch.swisstopo.swiss tlm3d-wanderwege&layers_visi bility=false,true&X=21 1397.50&Y=677935.00&zo om=8
Then, take the cableway from Rigi kaltbad down to Weggis, walk 15 minutes down hill to thteh Schiffstation and ride the boat back to Luzern.
www.myswissalps.com/ri gi
Or, with the short cuts noted via the Treib -Seelisberg Bahn, this hike:
www.myswissalps.com/fo rum/topic/the-swiss-path-and-southern-lake-lucerne
Those are not high alpine regions, of course.
Slowpoke
Here are a some links for the Jungfrau region:
www.myswissalps.com/ju ngfrauregion
www.swissholidayco.com /Public/Assets/User/fi les/Map-of-Jungfrauregion1.jpg
Trails -
www.jungfrau.ch/en/som mer/tourism/destinatio ns/kleine-scheidegg/hiking-trails/
Trail types -
www.alpenwild.com/stat icpage/trail-signs-in-the-swiss-alps/
Lots of links for special hikes:
www.myswissalps.com/hi king/bachsee
and:
www.myswissalps.com/hi king
Here is a little light reading about Wengen:
www.myswissalps.com/fo rum/topic/tips-about-wengen-and-the-jungfrau-region-by-kim
Kandersteg:
www.myswissalps.com/hi king/kandersteg-frutigen
In that link, the Südrampe trail is mentioned. More details for a very nice hike...in August, it will have hot sun and the trail will have definitely have a lot of walkers on it. Not a lot of room to pass and proceed if you are behind some slow walkers. I'm not recommending it until September on a week day. ;-)
:www.myswissalps.com/fo rum/topic/bls-sudrampe-trail
A famous hie from Kandersteg:
www.myswitzerland.com/ en-us/the-classic-among-classics.html
If you are not in good shape, don't underestimate the difficulty of a 965 meter altitude change at high altitude. Both up and down are difficult....up requires stamina, down can kill your knees.
This is a very detailed topo map that will let you compare the two regions. Zoom in on each region. I have zoomed out so that you can see both Kandersteg and Wengen on the map as I have linked it. I have turned on an overlay for hiking trails, color coded to match the signage describe above in the link on trail signs. I think you probably do not want "red, " and "blue" is for technical climbing. That leaves "yellow."
map.geo.admin.ch/?topic=ech&lang=en&bgLa yer=ch.swisstopo.pixel karte-farbe&layers=ch.bav.ha ltestellen-oev,ch.swisstopo.swiss tlm3d-wanderwege&layers_visi bility=false,true&X=15 8950.00&Y=625050.00&zo om=4