These pages gives details about the Finnish sleeper trains

https://www.vr.fi/en/night-trains

https://www.vr.fi/en/night-trains/sleeper-cars

You can check the regular standalone prices for sleepers on theVR website, sometimes they can be quite cheap booked well in advance, however they do not provide a way of booking interrail passholder reservations there.

To book you can use interrail booking website but be aware they send all Finnish reservations by post so only if you have at least a month between booking and travelling.

Alternatively you can book by calling VR at +358 923 192 902 they will sell over the phone and provide e-ticket.

While you can have 2 adults and 2 small children in a 2 berth cabin it will be a very tight squeeze, If 3 berth cabin is available that might do or booking 2 adjoining cabins with a door between them is possible.

You can book a sleeper indeed with your passes. Children between 0 and 10 can travel for free when they share a bed with someone else:

https://www.vr.fi/en/night-trains

More information about night train travel with children:

https://www.vr.fi/en/night-trains/sleeper-cars#with-children-on-a-nightrain

So 2 beds could be enough, but the beds are not very big. You could also book a 3-bed compartment and have both children share the 3rd bed.

Also check if the passes plus reservations are really cheaper than normal tickets. Reservation prices are here:

https://www.interrail.eu/en/plan-your-trip/tips-and-tricks/trains-europe/night-trains/santa-claus-express

If you decide for the pass+RES combo, it is indeed best to call VR-it can by now not even be done at stations anymore, they told me last may.

Also be aware that with a pass NO seat-RES is needed, for daytime, but as all seats CAN be RES for normal local tickets, you always run the risk that someone comes to claim that seat they thought as empty. This is pretty unique for FI