I ate at the California Grill with my niece and nephew, then 4 and 6, in December. They were fine, and certainly were not the only children there. Before dinner I purchased them a kit in Epcot that had stickers, markers, and coloring sheets. The waiter supplemented this with a big stack of blank paper. The kids ate their meals and then colored quietly for the rest of the evening. We were there for about 2 1/2 hours with no issues from them. They really enjoyed watching wishes from the roof deck.
As far as dress goes, you would be fine with them in whatever you like. We saw everything from casual wear, to PJs, to more dressed up. We chose to dress our kiddos up simply because we were dressing nicely for the meal ourselves. Caili wore a dress and Liam wore a button down collared shirt and khakis.