。
She was standing among the children.
Literal
She [topic-は] children of [between-間に] was-standing.
~の間 ('between, among') marks a position located between or surrounded by multiple things. 間に here adds the locative に: 'in the between-area.' The whole noun phrase 子供達の間 ('among the children') becomes the position of standing. 立っていた is the past stative ~ていた of 立つ ('stand') — past ongoing or past resulting state. Same pattern for sitting: 子供達の間に座っていた.