Setting up my family sharing : what will happen to the content previously purchased by the children?
Content from any member account is sharable, whether old or new - Apps, Books, Tunes etc.

Specific data points from those apps, though, will be lost if the account using them is not the same as previously.

For example, UserA was the original account. UserB &amp; UserC are added as family members. UserA &amp; UserB had previous purchases, different to each other. UserC is new &amp; 'virgin' but is the new Family Organiser account.  

UserC can regain any &amp; all previous purchases made by Users A &amp; B, but will lose account-specific data such as email [including the userA@icloud.com account entirely], iMessages, any game progress or reading bookmarks etc they had prior to the 'handover', as they all still belong to UserA.  

Similarly for UserB, but they will retain their existing user-specific data on existing apps etc.