Sometimes there is no logical reason behind people's fear. They may have been told something by a parent or another child. Even if it was not true, it can stick forever.

It is your job to keep your dog safe. Either from physical harm, as Zippy-Kat said, or from potentially being accused of biting or behaving badly toward the kids. Keeping your dog away is the easiest way to prevent trouble.

Its not your job to fix the children's fear. Its your job to protect your pet.