A legacy of colonial Britain, driving in Malta is on the left. Renting a car offers you and your family great flexibility with moving around the island. A car will allow you to visit many areas of the island which are not so easily accessible by public transport. If you are visiting Gozo then probably a car is definitely a must since the public transport is pretty hopeless in winder (Some routes stop early afternoon!).
Whilst hiring a car offers you much more flexibility, driving in Malta does come with its challenges! Driving around is pretty crazy, with many locals not exactly following all the road rules. Driving in Malta is unpredictable and chaotic, with lots of horn honking and overtaking in impossibly narrow roads, but then its not worse than driving around in most Italian cities especially Palermo or Naples.
Despite everything when travelling around with kids we would definitely recommend hiring a car to drive around Malta.