I’d recommend going to the library and picking up a bunch of chess books. Complete Idiot’s Guide to Chess is a good beginning book that covers the basics and some strategy and tactics.
You might want to learn for yourself how to set up a board, what the different pieces do and their material value, and good opening principles.
In setting up the board, think “white in the lower right” which means the square in the low right corner needs to be white. Also remember “queen on color,” which means that the white queen starts on a white square and the black queen starts on a dark square.
The material value of pieces is expressed in terms of pawns (or points) as follows: pawns= 1 pawn; knights & bishops= 3 pawns; rooks= 5 pawns; queen= 9 pawns; king= priceless.
Some basic opening principles are to move the king or queen pawn out 1 or 2 squares, develop the “knights before bishops,” and then castle. A general rule of thumb is to not move the same piece twice in the opening. This isn’t always the case, but it’s a good fundamental to stress sound piece development in the opening rather than moving a single pawn all the way down the board or bringing out the queen too early.
You also might consider getting a game on your PC or smartphone. Chessmaster is a pretty good one and I have the Chess Free app on my Android. This way they can play and explore how the pieces move.
The toughest piece for kids to grasp is usually the knight, which moves in an L shape and can jump over other pieces. I stress to my kids that knights are best in the middle of the board and in the middle of the action and I’ll use pennies to show where the knight can possibly move and ask them which moves are best and why. Remember, “a knight on the rim is grim,” meaning that a knight on the rim or edge of the board can’t cover as many squares (4 or 2) as it can in the middle (8).
I play against my 7yo now and again and I have her set up both sides of the board. She can identify the different pawns (king pawn, bishop pawn, etc.), and she knows to develop her knights and bishops and castle. She likes the taking part of a transaction, but I’m trying to teach her now about the what if? and if/then aspects of a move.