I was the person who stayed 20-27 December 2018 with 2 adults and 2 children in a WV. The kids were aged 5 and 8. There is a bit of a story behind it. I booked it a year in advance with points (28 Dec 2017) and at that time the WV description on the website stated 2 adults and 2 children under 12. Sometime in 2018, they changed it to 3 people max. I was informed that as I booked before the change, they would honor the booking for us. We were upgraded for 20-22 Dec to a FWV but had 5 days in the WV as booked. They managed to put 2 extra beds in for us, so it is certainly possible, although it does seem that this is no longer allowed. Others may have had a different experience, but this is what happened with us.
On an extra note, I find it interesting from the link posted to the Conrad site it now says "This villa sleeps three adults or two adults and two children. Children under 12 cannot be accommodated in over-water villas." -
There was at least one other family while we were there with a young child, so this seems either new or contradictory information.