I saw my children two days ago.
How are they?/How were they?
Are both of these natural in the given context or only one of them?
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There is no clear dividing line between how your children still are and how they were when you saw them. There's a grey area between the present and the past.
If someone asks you are how your parents are, and they were fine last time you saw them, you are likely to answer They're fine unless you have reason to believe otherwise. It doesn't really matter whether you saw them yesterday or last week.
And the same applies to your question. If your children were healthy and happy two days ago, and the questioner is merely being polite, s/he is likely to ask how are they.
If the questioner is aware that they had been ill or involved in a minor accident, the natural question would be how were they (when you saw them).
As so often, it's the context rather than the time elapsed that dictates the tense of the question and the answer.