Hi, I'd like to help you with your question.
It is always sad when a marriage ends, particularly when children are involved. Although your son in law was at fault for the end of his marriage, it sounds like your daughter and your son in law have been able to put their children first and handle this in a mature way so they do not get hurt worse than is necessary. Regardless of how your son in law acted in his marriage, the children will still need him as their father. Any way that unnecessary anger and resentment can be avoided should be considered.
Your grandchildren should be told that their parents can no longer be together. Your daughter and son in law should confirm that the children are not at fault for what is happening and had no part in the matter. The parents need to take blame and assure the children that no matter what happens, they are first in their parents lives.
The children are old enough to understand what may be the cause of their parents divorce. They may have noticed the subtle signs of Dad not being around as much or they may have seen or heard their parents fighting. The important thing is to be as honest as possible without causing additional hurt. Your daughter should try to control how she feels about her husband, at least in front of the kids. Family counseling should be considered, even if Dad is not willing to participate (though he should for the children's sake). But even if it is just the children who see a counselor, it will help them work out how they feel.
Also, your daughter and son in law should encourage open communication from the children. Let them ask questions as needed. If they want to know what broke their parents up, however, your daughter and son in law may want to come up with an acceptable answer that the children will be happy with but keeps their situation private. The children may know anyway and if they admit to knowing about the affair, then their parents should confirm it. The worst response would be to lie about it. Kids are smart and know when they are being lied to and this would only create mistrust in the family on top of the pain of the divorce.
I hope this has helped you,