I'm not asking you to share, but do you know more about the situation than you are sharing? Did the family member speak with you directly at any point about this pending visit? I'm asking because I think that I would have talked to him more and had more information before agreeing to have them come for an extended visit, especially with children and schedules in place. That's just my personality, though.
Regarding your children, I don't know that you need to explain anything to them just yet. I would see how they respond to it and play your explanation by ear. Things happen, and your kids will see that he is human. I'm probably weirder than most, but that human factor always made people more appealing to me.
Oh, I forgot about the sleeping arrangements. I like the suggestion to show them to their separate quarters and only address it if they say something.