I have several pieces of vinyl siding with holes or cracks in them. They range from a hole smaller than a dime to cracks several inches long. (They’re all in the backyard and I suspect that they result from kids playing ball.)
Question is: leaving aesthetics aside, how big of a deal is this in terms of protecting the house?
I actually have a few leftover pieces of siding from when it was originally installed (17 years ago) so I called a siding place for a quote on replacing them. They said they couldn’t tell without looking at it, but as a ballpark they seemed to think it was about $300 for 4 pieces (some of these pieces are attached to corners, which makes it more).
Cracks that let water in can be a problem. You can always go for cheep and use aluminum tape for duct work on the cracks and small hole. Paint over it with latex paint. The tape I used has stuck for 5 years now. It’s sealed under the paint though.
I replaced a strip of my vinyl, when it was only a couple of years old. A “zipper” tool lets you get in between the seam and unlocks the strip. The tool is not expensive, just a handle with a small hook mounted. The age of your siding might make it risky, and it must be done on a fairly warm day (70 -80 degrees). You would need to loosen the next piece to get one out. The pieces at the corner (on mine anyway) just slip behind, unless you mean the actual vertical piece. YMMV. Always leave room for the vinyl to slip a little on the new nails.
Not only water, insects also, can and will make use of holes in vinyl siding.
Since you’ve described the damage as being “in the backyard”, I’m going to assume that looks might not be as important, compared to the front of the house.
And, since you “suspect that they result from kids playing ball”, you’re probably gonna incur more damage if your kids are still playing ball back there.
IMPO (in my professional opinion), as a General Contractor w/20+yrs experience, the ‘tape fix’ is an excellent idea.