I agree with CGIPadawan. I remember the old “Schoolhouse Rock” bit on how a bill becomes a law from when I was a kid. The trick to getting them to understand is to make it tangible, relevant, and fun. There are numerous entertaining breakdowns on the web. I think that they’d dig it if they could see, in a fairly generalized way, how something goes from a concept drawing to a realized model or render. Kids are smart. They’ll get it, especially if the context is a film they recognize.
If you’re going to demo software to them, I think that Houdini might be a little heady. I’m not saying that they won’t get it, but it’s really a lot for a 7 year old to absorb even just visually. I mean, even casually, it’s a lot to take in for some adults too.
Personally, I’d probably demo with Sculptris. Digital sculpting is relevant to what we do. Being a free app, it’s something that their parents could probably download for them to experiment with at home. IMO, it’s a nice way for them to potentially continue the experience outside of this class. The important thing is just to get them interested. If they can touch it then it’s real. Who knows? You might just have a future CGS gallery artist sitting in the class.