I just started HRT a few weeks ago and have 3 kids in the house. They're 8, 4, and 1. I have not talked to any of them about this at this point. At bedtime, I have women's pajamas that I wear. My wife's theory was that I could just wear that and they'd not even notice... nice theory, but the moment my 4-year-old saw me, she asked, "Daddy why are you wearing girl PJs?" Ha!
I just said, honestly, that I liked them and that was that. No more comments at all. It's just what dad does and there's no framework, even for the 8-year-old, that suggests it's weird or bad in any way. (Depending on your wife/family background, that may or may not be true, I suppose.)
My plan is to outwardly transition in the next 2-3 years. Given that, I expect my 1-year-old will have zero memory of my male presentation. My 4-year-old will have vague memories, but more likely "dad" in those memories will be replaced by a memory of a female version of me. Maybe she'll remember that I did change, but I don't know. My 8-year-old will remember pretty clearly. But even he does not yet have awareness of gender and sexuality issues that are sophisticated enough to really understand what this means. He will soon, but not yet. Still, I think he may have some difficulty with this, particularly because he'll then be the only male in the family.
But they'll all be ok. School / peer / playdate issues are more worrisome to me, but we'll deal with those as they come. I'd say I am concerned but not really worried, I guess.