I think it's silly to make a child call anyone by something specific.
However-if they choose it-that is different.
We didn't tell our kids what terms to use. But 4 of the 5 chose "uncle" for GG.
Which-is totally ok.
As for what they know. They know we have a relationship and that it's romantic. They see us hug and kiss and hold hands. The older ones are well aware we have sex. It's not a secret. It's not shoved in their faces either. But they aren't ignorant.
It would be crazy for us to think they don't know that he's not "just a friend of our parents". He isn't JUST a friend. He's a life partner. So of course they know that. He is also someone THEY can count on as family, not just a neighbor or friend, but family. So not letting them know that would be taking away from their opportunity to make use of the value of that level of security and trust.
"Love As Thou Wilt"