How do you explain to your adult children about your sociopathic sister and why you've pulled away from having a relationship with the sister?

Honesty. Your children are adults. Hopefully they can understand honest simple language. Regardless, it is your decision and one I am sure you have not made lightly. So what is best for you and your safety and that of your family. If a relationship is destructive, then why continue?
Are they asking? If your children aren't asking about this, you don't need to explain. If they are, you can answer them honestly. "sociopathic" is an adjective that can encompass a lot, though. It might be better to simply discuss your own experiences rather than calling her a name. Also, the relationship itself sounds pretty painful -- might talking with a therapist be helpful for you personally?
It depends. However, in order not to do things or say things that u regret talk with a family therapist for advise.
Plain English works. It may or may not be a hard decision to make but telling a story or few often suffices. You may want to see a therapist a few times to gain insight, skills and more comfort for the process. Using labels shuts down communication. Citing instances where your sisters behavior was destructive can allow others to see how you came to your decision.