Some people all live together, some don't. Sometimes two people live together and other partners live separately and they see each other on date nights and possibly sometimes on the weekend, stuff like that.
In your case, if you feel it's too separated, it seems living together, or closer, might be an option. Having a schedule could help too so you know what to expect, but he might not be able to work that way, if he's more into "spur of the moment" things.
Either way it's definitely something you could explore and talk about. As for telling your kids, that's a different issue and there have been threads about coming out to kids specifically (or to people in general) which might help you, you might want to do a search for them.