My 3 children eat fish, lean meat, plenty of fruit & veggie, drink only milk & water. But eat 1 dessert/day. They r thin, should I still cut sweet?

Yes. Skinny kids are usually much more healthy than obese kids. Stick to what you are doing. It will "pay off" well in the long run.
I don't think so. But do avoid a lot of highly processed treats in favor of tastier high quality ones. Due to high universal levels of toxins, wild caught fish should be only once a week. Would also move the dairy consumption towards more yogurt & kefir. Being at the low end of one's bmi is still the only thing that ever has been scientifically shown to prolonge animal lifespan, so you're doing great!