By far one of Disney's best movies tbh. It's really funny but is also super sad at certain points-- like I can't watch this movie without crying genuine tears and just feeling the stress the characters, especially Nani, experience. Oh, and not only will the kids like it but parents will to :). It's good at going about more mature topics, heck part of the plot of this movie is Nani trying to keep Lilo from being taken away by the authorities for a more suitable guardian, stuff like that.
On a lighter note, yeah this movie is really funny. I'm pretty sure the backgrounds are water painted or something, which is cool as heck. This movie is so pretty, I love it being set on Hawaii, and then there are the aliens and space tech and sci-fi element of it and it's just such a cool mashup of things.
Then there's also the theme of family. It's done super well and it isn't just "family members realize that they have things in common" or "family member realizes other family member has done this or that for them" it's more like how you'll always be accepted by your family, wether or not it's the one you're related too. One that's got to stick together and not leave each other behind, which is brought up again and again by some good intertwining of Hawaiian morals, with the Ohana thing. Even in the later movies (which aren't rlly as good but I still enjoy them), they highlight how Hawaiians will call each other cousins, like they're all family.
TL;DR: Good for both parents and kids to watch, really good at pulling at your heartstrings, really funny, and just somewhere in the ball park of perfect to me.