Tell the cast member at the ride entrance you want to do baby swap or rider switch. They'll give you a "Rider Switch" pass which is usually good for 3 people, some might be more depending on how many fit in a ride car.
This can be done for the rides that have height restrictions like Test Track, Mission Space, Splash MT, Space Mt. Big Thunder, Tower of Terror, Rock n Roller Coaster, Dinosaur, & Primeval Whirl.
As of a couple of weeks ago I think all of them you reenter at the Fast Pass Entrane with your "Rider Switch" pass. So basically it is like a Fast Pass, so if the whole group has fast passes you probably don't need it, but we would get in case our Fast passes were going to expire. If the 2nd group wouldn't make it back in time they still could use the Rider Switch pass.
The group with kids can either go ride something else, play in the playgrounds by certain rides like Mission Space & Splash Mt. There isn't really anything special, but we found riding something else the best since some rides take awhile. For example, with Soarin - one group would ride, but the other with the kids would do the Land Boat ride. It kept the kids occupied.