Hello and welcome! I live across the little pond known as Lake Ontario.
Driving with 3 daughters! My one is a handful.
You should ask your questions in specific forums. I can tell you my opinion:
I've stayed in all types of places. Almost all people here will advise you to find a way to stay onsite you you get the magic 24 hours a day. For a family of 5, there are not a lot of choices. Art of Animation has the new familty suites, after that, you would be crowded in any standard room, or you need to jump up to an expensive DVC villa (they can be rented as a hotel room too with more limited availability.) You can get a DVC villa for a more reasonable price by renting timeshare points one time from an individual or from a person who brokers free points from people.
I would not stay at an offsite hotel, if you can get onsite for a reasonable price.
Finally, a house offsite can be an awesome deal and a great experience. You typically get a nice place with a screened in pool! Research carefully and go with a house that has specific reviews you can read so you know what shape it is in. Sometimes there are gotchas, like someone who is slow to return your damage deposit or a place that is more worn that pictures suggest. We had a great house once, where the only thing wrong was the gas grill, which was not safe to use (all parts rusty).
I know a lot about driving routes and advantages/disadvantages, feel free to ask me about that too or post on the Transportation board.