There are all kinds of issues at play here - the cost, the asking to bring a sibling, who pays, public venue issues, childcare issues....
In the end, these kind of things work if everyone is considerate of everyone else, and assumptions are not made or left unsaid.
As a reception party, many of the kids will have little siblings, and if parents are staying at the party, childcare for siblings can be an issue. The OP needs to be aware of this, but whether she and birthday child is happy for toddlers to be there too is up to them. They might choose to be flexible and open to all (who pay for siblings) or as it is their event, to say they would prefer no siblings.
If the latter option is chosen, the parents with younger siblings may have a dilemma - send child and sort out childcare or not send child if they can't be left alone and no childcare is available. Sometimes children with younger siblings do have to miss out, because parents can't sort the arrangements for everyone - it's just a fact. This doesn't mean the host is obliged to accept siblings if they don't want to - it is up to the invited parents to decide how to manage the situation - sometimes having more than one child or different ages means sacrifices have to be made and the sooner they realise that and that often the sacrifices have to be theirs, rather than on the part of the hosts the better. The host shouldn't have to accommodate all the siblings if they prefer not to and if they choose not to, they are not responsible if the parent then chooses to decline the invitation- the host cannot be responsible for making sure everyone's domestic arrangements all work out - they have invited an individual child for a treat, which is great in itself and if they cannot go any further or don't wants to, that fine and needs to be accepted by the invited family. As a parent receiving an invitation, I think we all need to be grateful for the invitation as it stands and be willing to accept or decline it as it stands and not to have expectations of extras - yes, ask politely and clarifying that you will pay and feed any siblings if you really cannot manage childcare (and this doesn't include asking if siblings can come simply because you think they would enjoy it) but be very willing to receive a 'no' and to accept it cheerily, because the party needs to be to suit the hosts and not the family arrangements of all the guest.
Regarding public venues and whether parents should ask if they bring a sibling or just state that they will be bringing them - well, even though it's a public venues I still think it's polite to ask. The presence of siblings even if they are paid for by the parents does change the dynamic of the event. The siblings never totally remain separate from the party. At food time or party bag time, or just during activities, they will often come and interact and it's almost impossible to prevent this happening - so for these reasons it's polite to ask, even if in reality the host cannot prevent anyone attending a public venue. When asking, it would also be good to be clear that you would be paying for own child and have no expectation of food etc....because a lack of clarity on these things causes stress for the host, as this thread shows. There are numerous threads on MN where mums who are offering a lovely treet for invited children worry about how many they will need to feed or pay for or give party bags to, because of the sibling factor and primarily because of a lack of clarity when someone asks to bring a sibling.
Personally, I would reply with a cheery 'they are welcome' but also be clear that they will need to pay on the door and sort their own food - it's perfectly possible to do all this cheerily and politely and there really is no reason why anyone should or could feel offended.
And move onto parties where parents simply drop and leave ASAP to avoid some of these kind of issues.