My take on this...
For younger kids (7 and under), give them some simpler games so they can learn how to use the keyboard and mouse (separately.)
I find Blocks (the one where you have to flip and find two matching blocks) to be good for getting kids to learn how to navigate around with a mouse.
Also, let them draw with MS Paint for the same reason.
Don't forget DXBall! 😀
In regards to learning the "baisc" keys on a keyboard (i.e space bar, arrows, ctrl, alt, etc.), I think Commander Keen is pretty good for that. And it's an outstanding game, really.
But even if you don't have a proper retro PC to run something like Commander Keen (or DOSbox setup), then something as simple the Pinball game included with Windows XP can still provide hours of fun. In fact, I just showed that one to one of my nephews last week, and he was totally hypnotized by it (which was quite the exception, as he doesn't care about any other video games, especially on a phone or tablet.)
While at the "learning how to use keyboard" stage, I find that racing games can also be quite fun for most kids. Any of the retro Need For Speed series should do here (except maybe Porsche Unleashed / Porsche 2000 - it's a really fine game, but most kids just won't appreciate the amount of understeer in the game's physics.) I'd say NFS 3/4 would be the easiest to pickup... not to mention many of the maps have jumps and other quirks that almost always make for a unique driving experience. They are hard games to master, though.
Another one that my niece and nephews really liked once they got a little more comfortable with KB & MS is Portal - yes, the one from 2007. I suppose one could argue it's not that much of a retro game... but it's still a fun puzzle solving game in 3D space. The sequel, Portal 2, is also very good.
And if they want to try a more "sandbox" type of game, but with decent real-world physics, give them Garry's Mod.
Once the kids are more used to navigating in 3D space with keyboard and mouse (and I'd say when they're older than 8-11 years), certainly try any of the popular multiplayer shooters - i.e. Quake (1/2/3), Half-Life Deathmatch, Counter-Strike (1.5/1.6 or Source), and etc.
As for Half-Life (single player mode) - save that one for when they are older (I'd say >11-13 YO). It's a great game... but boy, I still remember the shivers it gave me the first a friend and I played it. Then again, it probably didn't help (or maybe that's what did it) that we were playing it on a CRT, late at night, with no lights in the room, and our parents "not around".