The sentence describes children listening to their teacher and sitting silently in school.
The correct translation of the sentence is: As the children were listening to their teacher in school, each silent one was sitting.
In this sentence, the children are listening to their teacher ('Ut liberi magistram eorum in ludo audiebat') and each silent child was sitting ('quique tacitissime sederunt'). The key is understanding the verb forms in Latin and how they correspond to the English translation.