Kim Fonseca, 10, who attends St Cuthbert's RC School in Cardiff Bay, said she had enjoyed watching Pontypridd swimmer David Roberts the most and was excited to see the athletes.
"It's exciting," she said. "I didn't know it was going to be this crowded.
"The Paralympics were amazing; they were great," she said.
Television presenter Angharad Mair started the celebration and paid tribute to the athletes, saying: "They did an absolutely fantastic job out in Beijing representing Team GB, 31 of them - 15% representing Wales."
The crowds were entertained by Fitzalan High School steel band and Radyr School Choir.
The event included a procession led by a traditional Chinese dragon.
Clifford Baralos, 71, of Llanedeyrn, Cardiff, who was with his wife Madeleine, said: "It's well worth supporting. We have got to give these people credit for what they have done.
"The swimmer David Roberts was outstanding. This isn't the first time he's done it.
We watched the Olympics and think we got a greater kick out of the Paralympics
"A lot of able-bodied athletes got more publicity for one gold medal than he's had for four."
Alun Ffred Jones said the athletes performed "fantastically well" in Beijing.
"I'm pleased that we're providing a fitting recognition of how well they have done," he said.
"I'm looking at the banners in front of me and see the words 'congratulations, welcome home our heroes' and that says it all."
Thomas Linton, 70, was with his wife Pamela, 68 both from Caerleon, said: "We have been watching it for the last couple of weeks and enjoyed every minute of it and thought we would come down here.
"We watched the Olympics and think we got a greater kick out of the Paralympics."
Twenty-four of Wales' 31 Paralympians attended the celebration and were greeted with a huge roar from the crowd.
Each of the athletes were then introduced to the crowd individually and were presented with flowers by 12-year-old Harri Jenkins, of Bryncoch, Neath.
Harri, who has cerebral palsy, is a swimmer who hopes to compete at future Paralympics.
The loudest cheer was reserved for swimmer David Roberts, whose four gold medals in Beijing took his Paralympic tally to 11 golds equalling that of Dame Tanni Grey-Thompson.
Pupils from his former school, Bryn Celynnog near Pontypridd, were amongst groups of school children in the crowd.
Kim Fonseca, 10, was among hundreds of children at the event
David Roberts said: "It was amazing, like nothing else I have experienced before.
"It's just an honour to be welcomed like that and hopefully it will inspire more people to take up sport."
Roberts was asked whether he would compete at the 2012 Paralympics in London but was non-committal.
He said he wanted to enjoy his success first but admitted competing in front of a home crowd would be "super, super exciting".
Other athletes attending the ceremony included 13-year-old Eleanor Simmonds, a double champion in the pool who trains at Swansea.
Fellow Swansea-based athlete Liz Johnson, who won gold despite losing her mother to cancer as she flew out to Beijing, also attended along with her partner, gold-winning cyclist Jody Cundy, and double-gold winning cyclist Simon Richardson, from Porthcawl.
Rhodri Morgan paid tribute to David Roberts and also to Simon Richardson.
He said: "The Olympic gold rush was kicked off by a cyclist from Wick (Nicole Cooke) and the Paralympics was kicked off by a cyclist from Porthcawl...congratulations on everything you have done - you have really made us all feel proud of you."
The proceedings were wrapped up by a rendition of the national anthem, led by pupils from Radyr.
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