There are so many things to do while in SE Alaska, but this is one for the must-do list. The train ride is relaxing and breathtaking. It would be very comfortable and interesting for the entire family. If you have older children only, consider riding the train up into Canada and biking back down to Skagway, but make sure to bring VERY warm clothing if you go before July.
I took this tour with a group of adults, but there were plenty of children with families along for the ride. I hesitate to suggest this for kids with short attention spans. There is not alot going on during this tour except for the beautiful scenic and historical views of Alaskas White Pass. Although most of Alaska is historical in some way and not much of a kids playground. I enjoyed the views and got alot of great pictures. If your child loves trains I bet they would enjoy this ride and just have fun being on a train. There is just one small bathroom stall in these old cars so don't expect an easy diaper change, it'd have to be on the seats, which can be cold in the later season. Dress the kids WARM and in layers. Heating is limited. If your child likes history or trains, bridges, tunnels or all, they may be able to enjoy this tour for what it is.