This is a great question, and one that many people don't understand. Not every kid responds to every vaccine with 100% of an immune response. So, her kids are likely to catch illnesses (for which there are vaccines) from other people they come into contact with. And, you have no way of knowing that your kids have had a complete response to every vaccine they've been given. Therefore, it is possible that if 1) their kids are exposed to something, AND 2) your child didn't have a complete response to that specific vaccine, your child could catch it and get sick.
This is a fairly low probability. But it is possible. For that reason, I would let my children play with these kids. However, if one of those kids gets whooping cough, or mumps, or whatever, then you should keep them away from each other until their entire family is healthy, and also keep a close eye on your children for symptoms of that illness.