Yes, the application does ask for your children's information and whether or not they are migrating with you. Your children's information should have been listed and they will need to have their medicals done when you do yours. Very extensive background checks are done on all applicants for security purposes. I would not be surprised if the fact that you have three children was turned up in that process.
You do indeed have a big problem. Lying to DIAC or intentionally omitting relevant information is against the law. I would suggest right away that you fill out this form
(notification of incorrect answers)
On the form, where they ask why the incorrect information was provided you can say that you believed as your children were not migrating with you they did not need to be listed on the application, but have since found out otherwise (if that is true).
Then e-mail your CO, if you know who they are, and very humbly say you have realized this is a big error and you fully apologize for inconveniencing them. Explain your error, and that you've attached the form you believe they need. Ask them to let you know if they need any further information or clarification. Make sure they have all your current contact information. If you don't know who your CO is, send the same e-mail to the general e-mail address for your embassy (which should have been provided on your acknowledgment). Hope that helps.