Hi, onit, I hope you don't mind me responding. I'm a lurker, and well wishers but I don't think I've posted on your threads before.
I think you've done brilliantly with that conversation. 
Yes, I would tell him - it's seems only fair, as they may want to talk to him about it (and just because he's an arsehole doesn't mean you have to sink to his level).
But it sounds like you've told them all the age appropriate facts in a nonjudgmental way, and they can work out how they feel about those facts by themselves, over time.