Yes they need more room, homemade chicken swings are a good idea for toys though. Are you able to free range where you are, that would help, but a bigger run is your best bet.
If you could watch them and figure out who us doing the plucking, you could seperate him/her for a little bit and see if that helps. Chicken saddles and painless peepers May be an option when they get older? And fester plucking is often caused by boredom if they don’t have enough room, or they...