Children's books have death and violence and sad things in
Children like death and violence. They know life isn't always happy. True, they want goodness and fairness to win, but some scariness on the way is necessary. Children also like to read about other children who are orphans, have nasty parents or face terrible hardships.
This is nothing new. There are some quite horrible bits in the Narnia books; when Peter defeats Maugrim in The Lion, the Witch and the Wardrobe, for instance, and the werewolf in Prince Caspian who is killed while partway through transforming from man to wolf.
Books for teenagers have sex and drugs in
There will always be books which plumb alleged new depths of bad taste, for adults and children. Remember the shock and horror Judy Blume once inspired? (I tried one recently and was surprised to find it was pretty well-written, though not the sort of thing that would have interested me as a child - or does now.) I don't think reading about this stuff harms young people at all. They'll probably find it either deadly dull or hilariously funny.
Adults are unashamedly reading children's books
Well gosh gee. As loganberrybunny points out, Watership Down, described by the author as 'a real grown-up novel for children', has enjoyed side-by-side Penguin and Puffin publication for three decades. Other examples include Biggles, written for adults but seized on by children, Richmal Crompton's William books (ditto) and anything by E. Nesbit.
I read children's books often, both revisiting well-loved tales from my childhood and discovering new greats like Jacqueline Wilson and Lemony Snicket. I like or dislike them for the same reasons as any other book, judging on plot, character, humour and ability to grip the reader, and I seldom find them lacking.
Of course, it helps that children's books are more likely to have talking animals in.
In related news: yesterday I finally bought Lion Boy, because people keep telling me that they saw it advertised and thought of me.