I have my sewing table in what is my grandchildren's playroom. I have my things in one corner of the room facing the door so I can see what's going on.
Also, have a tall white storage cabinet with all the movies/games/color books/crayons/etc. in it and I use half of the closet for my storage tubs and half for the rest of their toys. The only complaint I have is that you have to be sure to put all your straight pins/scissors/etc. in a drawer and teach them not to bother the sewing machine. You can make it work.