Your dog has probably been bitten by an insect, like a bee, or had an allergic reaction to something she ate. The simplest way to check this is give her a dose of Benadryl. The dosage for dogs is 1mg per lb of the dog's weight, three times a day. If you notice a reduction in swelling after the first day, then this was simply an allergic reaction and as this is not contagious to your kids, you need not worry.
To avoid this from happening again, keep your dog away from unsupervised areas, so that she does not get bitten again, and if there are any bee hives in your garden you might want to ask animal control to come over and remove the bee hive, as this can be a potential hazard for your kids as well.