Islam is a holistic way of life. It encourages its followers to spend time amusing little children, taking the Prophet Muhammad as a role model in this regard. Scholars state that, although Islam discourages imitating the appearance of animals in many ways, it considers face painting for children at parties and similar happy occasions as a permissible act.

Sheikh Abdul-WahhabIbnNasir Al-Tariri, states the following: Scholars have determined that, as a basic rule, imitating the appearance and behaviour of animals is disliked and even impermissible. They argue that whenever we find human being compared with animals in the Qur’an and the Sunnah, it is always as a means of degradation.
For example Allah says, [So his parable is as the parable of the dog; if you attack him he lolls out his tongue]  (Al-A`raf 7:176).
Allah also says, [The likeness of those who were charged with the Torah, then they did not observe it, is as the likeness of the donkey bearing books](Al-Jumu`ah 62:5).
However, this ruling applies when the imitation of animals results in degradation, insult, or a loss of dignity. The estimation of this depends on the nature of the imitation itself as well as the context, both specific and cultural, in which it takes place.
We see that the Prophet (peace and blessings upon him) used to kneel on all fours and allowed his little grandsons, Al-Hasan and Al-Husayn, to ride on his back. He then said to them, “What a fine steed you have” (At-Tabarani).
In some narrations, he is quoted as saying, “What a fine camel you have and what fine gentlemen you are.”

This shows that imitating animals is not forbidden under all circumstances. In your case, the context is playing with your children. It is a well-known way that parents play with their children at home, and this is perfectly acceptable in most societies.
the same considerations apply to children painting their faces at parties. Face painting is merely an amusement engaged in by children on special occasions. It implies no shame or loss of dignity for those children in the broader social context.
Therefore, face painting for children at parties and on other festive occasions is comparable to the Prophet’s behaviour with his grandsons. It is permissible.