Curiosity. Kids are curious about each other and about those around them. Male and female children generally will spend some time examining each others covered parts from this curiosity. They will sneak a peak at mom and dad when the opportunity presents itself. In some societies like japan, communal nakedness is routine. And also for some 'hippie' communes. Seems to do no real harm.
Yes. When children are small it can be ok for you to shower together to teach them to wash, dress together to teach them to put on clothing etc.. The older they get, particularly if your children are the opposite sex from the parent, the less appropriate it will become. Children also need to learn privacy and modesty in order to get along in our society; so teach them these by example also.