As for my girls, I think they ARE able to understand an affair (13 & 16) and that they DO know it is NOT something married people should do. Obviously, my W and some counselors (mostly divorced themselves) say we shouldn't adress it directly as it would make her look like the "bad guy" and perhaps permanently damage her relationship with her kids. They feel it is an "adult" thing that the kids just don't need to know about. I think that lets her off the hook too much.
In my experience, this comes down about 40/60, with 40% being in favor of telling older children the truth. Lots of anecdotal stories about "when I was younger, I was glad my parents didn't tell me" being offset by "My parents lied to me, and to this day, years later, I still have a lot of emotional scars" stuff.
I CERTAINLY wouldn't lie to them, if asked a direct question. THAT could be really damaging. With everything that's going on in their little world right now, they need to know that at least ONE parent is telling them the truth.
I also think you need to look at their ages, and the fact that they are forming -- now and in the few years ahead -- most of their opinions and values about how to relate with the opposite sex. I think you want those traits in them to be formed as healthy as possible.
I do think it's possible to "love the sinner, but hate the sin," and to speak the truth, in love, without "running down" the other parent.
