This is my favorite time to be in Disney. The resorts are decorated and there is music playign softly everywhere. For my family, this is a slower kind of trip, more leisurely than any other season, becuase we truly do stop to take in the atmosphere. WIth young ones, I would book whatever resort fits your budget, ( I love POFQ during the Christmas season) and then make a serious plan ahead of time so I don't miss the must see "attractions" throughout the World. For instance, I would be sure to plan an evening in Fort Wilderness and take the wagon ride around the Fort to see all the decorated campsites. This could be your Magic kingdom resort hopping afternoon/evening. Start at the Poly and make the rounds to the GRand to check out teh GIngerbread house. Look for hidden Mickeys, and enjoy that lobby, head over to the CR and see that display, and then take the boat to WIlderness Lodge. From there dinner in the campground and the "tour"
You can spend time wandering around the Epcot resorts, and plan a good deal of time in the World Showcase. There are storytellers in most countries, and the kids love them.
Magic Kingdom is stunning! I love the People Mover after dark. The glimpses of teh Castle drippin in Holiday finery make the evening!
I book a FP for the Jungle Cruise. It is histerical and is one of teh only times you will seee a Holiday layover in WDW. It is funny!
I am not sure your family woudl want teh Christmas Party, but if you do, that is whee you see the special parade. If not, plan dinner outside of the park at a monorail resort an dthen mosey on down to the beach to watch teh christmas fireworks display. It is pretty.
I am no longer a fan of Downtown Disney....Disney Springs is way to not Disney for me, however there is a Christmas Tree Trail you might like, and the decorations are very pretty.
I cannot speak to DHS any more, it has been a while since I spent time there during the Holiday, but I think it is the best time to visit Animal Kingdom. The tree is awesome, as are the decorations throughout the park. And it is not HOT!!!
We find that the Holiday trips keep our enery in check. We plan to see the decorations, and in doing so we are not running from attractin to attraction, and end up leaving WDW at least as relaxed as we arrived, and many times more so.