We were in Alvor in May with our 4 kids 1yr, 3yr,6yr and 8 yr old. We spent a great day at Zoomarine, it cost 80euro but everything inside included, pools, waterslides, rides, dolphin show, sealions, bird show, Aquarium(except food, plenty available and they don't roast you for it either!). You could easily spend a day there. But saying that it was the older 2 who loved it and the younger 2 well we could have been anywhere! The 3 yr old though still talks about the dolphins. On the other hand we paid 80 euro for a 1 1/2 hour boat trip along the coast. This was a disaster as all of us were sea-sick as the sea is quite choppy near the cliffs. The boat owners and guides were great but in hindsight a boat trip at sea with kids not great idea....they also do river trip which may be more suitable, but still I believe very pricey.
Best options and for free which our 3 yr loved most, beaches....and there are so many of them!We had hire car so travelled to many beaches off the beaten trail.
Enjoy your trip and if in Alvor eat in Captains Table we found them really child friendly.
Puffin