This movie is really depending on the person. I watched it with my mom when I was 14. I knew it was all fake and I was really getting into horror movies at the time.
It isn't really gory in my opinion. There are dead bodies, but the movie is from the 80's so the detail isn't the uber best. I don't like much gore and I didn't throw up, so if that says something.
There is some implied sex between two teenagers. Nothing it really shown, though they do show the rest of the cult watching on. If you personally aren't comfortable with this, don't watch it or just skip it. It is one scene and it is like five minutes, if that.
It doesn't really follow the short story, but is close enough to it in the violence. There is murder and fighting, but that comes with the territory of the movie.
I would say to let your teenagers watch it. It is a unique concept for the time; the children being the murders. If you want your younger children to watch it, just make sure they know the difference between what is real and what is fake. It could terrify them otherwise.
I would also say to avoid it if you a sensitive to the idea of children having sex. While not being fully shown and barely having any really standing in the movie, it can be a no-no for some people and probably wouldn't be appropriate for the younger crowds. The story revolves around a cult. It steams more towards the Satanic side without really being "Satanic". Still, if you have issues with that, defiantly stay away from this movie and all of its sequels.