Q - Is cross country skiing OK for small children?
A - Yes as long as you can hire boots and gear children as young as 4 or 5 can learn (It gets coild so make sure that they are rugged up well)
Q - Do you have to be super fit to cross country ski?
A - No, just a moderate level of fitness is fine. If you can walk you can cross country ski
Q - Is is expensive?
A - No. You may still have to pay resort entry to some locations (Falls Creek and Hotham) or the $10.30 fee to enter Mount Bufalo but thre are no expensive lift fees to pay and most resorts do not have trail fees (Excepting Falls Creek) Cross Country Skiing is much cheaper overall.
There are no trail fees at Mount Buffalo