This is a project we did a couple of years ago and finally got out and put up in our new house. I saw this in the Disney Family Fun magazine. We had everyone in the family send us a tracing of their hand and then attached a picture to their hand print (that I had traced onto construction paper). On the fingers of each hand I wrote the person's name, their relationship to our daughter, and their birth date. Then we got all of them laminated as well as laminating the tree. It's been a great way to learn all the people in our family. We need to add a couple more kiddos and update the ones that have been growing, so that makes it a fun on-going project. :)
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).