Stops in the street and sits down and barks at them. We have grandchildren who visit so he has met children before! Worried that if off the lead in the woods he may frighten a child who will then run and make a fuss...... you can see what might happen if he decides to have a chase. He is growing his balls - would this have anything to do with a change in behaviour? Soft as butter usually.
Dogs have several fear phases and this sounds like one of them. Make light of the barking, in a happy upbeat voice talk to him and let him understand the situation is fine.
The more correct interaction he gets the better, do not stay away from children but try to keep him below threshold and have positive calm interaction with children.
I would be doing LAT (Look at that) look at the scary children, click treat, eventually he will look at children (no longer worried because of positive association with yummy food) and than straight back to you for the treat.
Don't tell him off, but try to stop the behaviour before it happens. So if you spot children in the distance, get his attention with a treat or toy, turn him away from the children and occupy him with some training.