The Islamic ruling on this matter is as follows:
Firstly: If this hugging and kissing is of the type that takes place between husband and wife when they are alone, then it is not permissible to do it in front of the children whether they are little or big. Allaah says (interpretation of the meaning):
“O you who believe! Let your slaves and slave‑girls, and those among you who have not come to the age of puberty ask your permission (before they come to your presence) on three occasions: before Fajr (morning) Salaah (prayer), and while you put off your clothes for the noonday (rest), and after the ‘Isha’ (night) Salaah (prayer). (These) three times are of privacy for you; other than these times there is no sin on you or on them to move about, attending to each other. Thus Allaah makes clear the Ayaat (the Verses of this Qur’aan, showing proofs for the legal aspects of permission for visits) to you. And Allaah is All‑Knowing, All‑Wise.
59. And when the children among you come to puberty, then let them (also) ask for permission, as those senior to them (in age). Thus Allaah makes clear His Ayaat (Commandments and legal obligations) for you. And Allaah is All‑Knowing, All‑Wise”
Ibn Katheer said: Here servants and children are commanded not to intrude upon the adults of the household at these times, lest the man be in a position of intimacy with his wife and so on. (3/401).
If children are obliged to seek permission lest they see something of that which takes place between husband and wife, then what about doing such things openly in a deliberate manner? Look at the etiquette that was observed in the household of the Prophet (peace and blessings of Allaah be upon him) and how the Sahaabah (may Allaah be pleased with them) transmitted the details of his life.
The following was narrated from the Prophet (peace and blessings of Allaah be upon him) concerning that:
It was narrated from Kurayb the freed slave of ‘Abd-Allaah ibn ‘Abbaas that ‘Abd-Allaah ibn ‘Abbaas told him that he stayed overnight with Maymoonah, the wife of the Prophet (peace and blessings of Allaah be upon him), who was his maternal aunt. He said: I lay my head on the end of the pillow and the Messenger of Allaah (peace and blessings of Allaah be upon him) and his wife placed their heads on its side. The Messenger of Allaah (peace and blessings of Allaah be upon him) slept until midnight, or shortly before or after, then the Messenger of Allaah (peace and blessings of Allaah be upon him) woke and started to rub the sleep from his eyes with his hands. Then he recited the last ten verses of Aal ‘Imraan…
Narrated by al-Bukhaari, 4571; Muslim, 763.
Al-Nawawi (may Allaah have mercy on him) said: This indicates that it is permissible for a man to sleep alongside his wife without being intimate with her in the presence of one of her mahrams, even if he has reached the age of discernment. Al-Qaadi said: In some versions of this hadeeth it says: Ibn ‘Abbaas said: I stayed overnight with my maternal aunt one night when she was menstruating. Even though the isnaad of this version is not saheeh, it contains a very interesting idea, because Ibn ‘Abbaas would not have asked to stay overnight on a night when the Prophet (peace and blessings of Allaah be upon him) may have wanted to be intimate with his wife, and his father would not have sent him there unless he knew that the Prophet (peace and blessings of Allaah be upon him) would have no need to be intimate with his wife – because it is well known that he would not have been intimate with her when Ibn ‘Abbaas was there sharing the same pillow with them and he was watching to see what the Prophet (peace and blessings of Allaah be upon him) did, and he did not sleep or he only slept a little.
Sharh Muslim, 6/46
In addition, doing such things openly is an action that is contrary to honour and decency.
Al-Maawardi said: Honour and decency means making sure that one’s deeds befit the circumstances so that no deeds may appear abhorrent or blameworthy.
Adab al-Dunya wa’l-Deen, 392.
The negative effects that such behaviour has on the children’s upbringing is sufficient reason not to do it, for children are created with the natural instinct to imitate their parents in all their affairs. So there is the fear that one of them may try to do that out of ignorance and a lack of understanding of what he is doing, and this is bad enough. Moreover there is no guarantee that small children talk to others about what they have seen, and it is obvious that this will cause embarrassment and loss of geerah (protective jealousy)
Secondly: If the affection that the husband and wife show in front of the children is of the kind that is usually shown, namely compassion, kindness and care, which will fill the house with peace and respect and happiness, especially on occasions such as Eid etc, that is permissible.
Showing that kind of affection will have an effect on the children’s peace of mind and will make them sense that there is mutual understanding and harmony in their family. There is nothing wrong with showing that kind of affection, but only as much as is necessary and without doing anything that is forbidden. And Allaah knows best.