OK.. These kids are young.. and just past the earliest stages of learning music on piano..
When you say 'showing interest', are they actually coming up with a fragment of melody - or a couple of chords? If so, you may want to ask, "how do you hear it going from here?" They should have some idea, and show you with their voice… If not, you can show them some options based on what they've already shown you.. maybe show a couple other chords in the (apparent) key signature -- like the obvious I IV V - and maybe later ii, vi… Showing more than a few options becomes too confusing…better to start small.. If they have a melodic fragment, you might ask them to sing the next few notes, or ask whether the line should go up or down..(and perhaps, show them the other notes in the scale) I believe asking them what they hear is the best way to go about it, and then providing modest options, chords, with possibly simple rhythm patterns to accompany.. I'd be careful, because learning too many 'rules', especially at first, can smother the naturally creative voice.
If they have only expressed interest - but have nothing to show - sometimes it can be liberating to play a duet, where the teacher 'grooves' on a couple of chords, while the student is told to 'improvise' -(though for young ones, i don't use that formal term, i say 'mess with') with just their right hand, (with single tones, -no intervals or chords)- a chosen selection of notes which go with the chords chosen..Students loves this sort of thing… i do it at the end of the lesson… They always look forward to it…like dessert.