As long as both are enjoying themselves and neither are fearful then leave them to play.
If you see one of them getting too rough and the other is getting scared or angry then you can step in and distract them with a toy to focus on.
Harry stalks and pounces on Lola all the time, with or without toys, it is good healthy play for them and when things get out of hand (which happens) I grap and toy and get them to focus on it.
Harry also waits for Lola to lay down, grabs a toy and encourages her to grab the other end then pulls and drags her all over the wooden floorboards - they love it.
You don't say what breed your other dog is, if a small breed then you are right in ensuring your GSD is aware of their size difference and to respect accordingly - this is something you should teach now and continue to reinforce as GSD gets older.