This is my response based on both your original post & title and the further information provided - not taking into account any other responses:

1. How to say they are not invited: regarding the title i think the only chance to have mentioned they were not actually included would have been when she said her DH and children would be attending, i would have said i'm sorry but we are having a small get together and only inviting those who shared my journey and DD's first year, i hope you don't mind but we are only having 'family' children attend.

2. So do you find it rude that she is bringing her family along without asking? If i had received the invite from a friend under these circumstances i personally would assume my children are invited unless stated ádult only' for me it's more the matter we take our children everywhere and very rarely attend functions without them but our friends and family know they so it's generally stated on the invitation.

3. It's your daughters b'day and you need to be happy with who attends and HOW it pans out, if you were not aiming for a 'party' atmosphere i think written invitations gives people the feeling that is IS a party IYKWIM, personally i don't see the difference b/w a gathering of family/friends and a 'party'. But YOU need to be happy about it all.
If you wanted to address the issue now then i would suggest mentioning there are only going to be younger family children in attendance, no games and no kiddy food and her kids may get bored. That way your not saying that they CAN'T come and it's giving her an out IYKWIM.