I have two kids and a granddaughter living with me (ages 12, 10, and 3). They all now know that Muhmuh (a.k.a. Daddy) likes to dress in women's clothes sometimes.
I don't remember if I told my grand daughter first, but she was definitely the easiest. I didn't actually even tell her. I just wore a few feminine (i.e. pink or sparkly) shirts around the house. She said she liked my "dress" which is what she calls any women's clothes. I took that as a good sign and came to dinner one night dressed in a somewhat fancy / somewhat clubby dress complete with boobs. No makeup, though. She liked it and I've been wearing whatever I want in front of her since.
When I told my son (12 going on 32) I got the distinct impression that he already knew. My ex-wife knows and she may have told him (though she never ran it past me). In either case it was a very easy conversation. for the most part his response was a matter-of-fact "and?" It felt like he kept expecting me to drop some major bombshell on him. Instead all he got was a non-shocking "daddy's a cross dresser" conversation. In his defense, I started off incredibly nervous, beat around the bush a lot, and eventually blurted it out then dropped to nervous silence.
My daughter (10) was on the opposite end of the spectrum from my son. They both already knew that I am bisexual, and she wanted to know all about everything. She asked if I'd ever gone out (yes, once), if I'd ever go out again (yes). She wanted to know about my dating and sex history (I told her everything except the gory details which wasn't hard because my past is relatively tame all things considered).
In all three cases it went a lot better than I could have hoped for. I held back for quite a long time out of fear and it turns out my kids loved me all along.