Stay in the village or nearby?
Staying inside Santa Claus Village means you can walk to Santa's office, the Arctic Circle line and the shops in a few minutes, which is ideal with small children. The trade-off is more people and more light around you, which makes aurora watching from your room harder.
Resorts 10–20 minutes away, on the hills and lakes around Rovaniemi, give you darker skies, more privacy and usually more space, with Santa Claus Village still an easy taxi or shuttle ride away. For a stay of three nights or more, many families find this the better balance.