The first time I made this I just put it all up on the wall myself. So I had it arranged according to each side of our family. This time Autumn got to choose each person that was going up and where to put them. So our tree is rather mixed up but she got to make all the decisions so she's thrilled!
So let your kids decide who goes where. As you are putting them on you can talk about "first" "second" "third" "next", etc. We also work on colors (the leaves), family member's names, counting (fingers on each hand and the hands themselves), gender recognition (counting works here too, how many girls/boys?), some of the hands are right side up and some upside down so we can work on orientation as well. (I can work learning into just about anything, it took me a while to learn how to do that). Heck you can even sort these before they get taped up on the tree (same concepts as above).