Steam games for kids advice (aged 4 and 7)

I haven't played the game I'm about the suggest, but to be honest if I was a small kid I would be in love with Ori and teh Blind Forest. The artstyle is like a Disney/Pixar thing so if they watch the new movies they would have something to connect with.
Scribblenauts it's a good choice.
Psychonauts?

Try Rayman games.

Do you want games to play with your kids or a game that they can play with each other in split screen?

Basically, do you want single player, two player or more co-op games that are child-friendly?

Woodle Tree Adventures is a very child-friendly game and you can even play it co-op
http://store.steampowered.com/app/299460/Woodle_Tree_Adventures/

And I see steam has a Family Friendly tag now : http://store.steampowered.com/tags/en/Family+Friendly

For the 7 years one, you could try bastion if you haven't yet, cheap and very recommended.

Plus the family friendly tag in the comment up here.

A kart racing game maybe? Sonic &ASR Transformed is quite good but there are more in that genre.
I'm guessing that you're looking for multiplayer games.

Slime Rancher, Toki Tori, Rocket League, Tiny & Big: Grandpa's Leftovers, Human Fall Flat, Grow Home, Spore ...

The legal age to use steam is 13+ even its just the family. Buy a Wii and Super Mario Kart or Party.

I'm no parent, but when I was a kid I was (and still am) fond of Bud Spencer and Terence Hill movies. Now there's the game, Slaps and beans! Easy dialogues and plenty of time for reading, funny and easy gameplay, on easy difficulty it should be a walk in the park even for them.
You should show them some of their movies, too!
Happy holidays!

Edit: Oh I see you are from the Netherlands. Sorry, there is no Dutch translation at the moment. Anyway, dialogues are not really important, or you can always translate them for your kids.

I don't own it but Portal Knights seems like a fun family game to play. Looks similar to minecraft and targeted for all ages.

Overcooked

For teaching phonics/spelling, Letter Quest.

My 4 yr old likes to play Pixel Puzzles Junior with me and often helps out in hidden object games.

The Sims 3, Spore

Fantasy themed hidden object games are like tales, they could work, I really liked them as a kid
Anything from humongous entertainment?

I'll second slime-rancher. Very kid-friendly

But my 8 year old plays Hotline Miami, while my 5 year old plays Dead Rising, so I'm probably not the best person to ask

Doom.

Disney games?
http://store.steampowered.com/sub/52412/
http://store.steampowered.com/search/?publisher=Disney%20Interactive

Mimpi.

Super Indie karts or if they go graphics sucks, the sonic racing game.

Lego Batman 1, Lego Indiana Jones 1&2, Lego Harry potter, Lego Pirates of caribbean. (those are easier than jurassic park)
-Costume quest 1&2.
-Spelunky.
-Steamworld Dig.
-Bang Bang Racing.
If they love Adventure time, they will enjoy some of the adventure time games:
-Adventure Time: Finn and Jake Investigations, Adventure Time: The Secret Of The Nameless Kingdom, Adventure Time: Finn and Jake's Epic Quest.
-Mickey's Castle of Illusion.
-Grow Home.
-Jet Set Radio.
-Monaco
-Sonic All-stars Racing & Sonic All-stars Racing transformed.

Scribblenauts Unlimited - Really recommend this. Even I, someone who is 19 enjoyed this.
Scribblenauts Unmasked - Same game as above, but with DC characters. (alot of them)

Other than that I'd recommend Cook Serve Delicious 1 or 2

The Last Tinker: City of Colors and its on sale for $1.99 :)

Putt Putt, Freddie Fish and Pajama Sam games are great for youngsters.
Humongous Entertainment Games

Might be a bit too difficult but if you think they're up for it I would say games like Monkey Island/Deponia

My nephew is 8 yo and plays GTA V