Why/ Why not are we hiding children from realities of the world and Should we be?
Before a certain age, yes, other then warning them about the dangers like not talking to strangers.
Are children really innocent - why, why not?
For that you need to understand children's mental development. Basically cognitive thinking, the ability to reason things out and draw conclusions develops around the age of 8 and sometimes 9. Previous to that they learn by rote. That is why jokes like "When is it time to go to the Dentist? Tooth hurty." is so funny to children at that age. They don't really understand the reason for similarities between words like that and think they are funny but adult humor that requires reasoning or drawing your own conclusions are beyond them. At that age they are essentially innocent and only know what they have been taught. But they are taught by everything they see and hear so their environment has a HUGE impact on them. That is why people are so angry at the way society tends to poison the minds of these small children before they even become old enough to understand and reason for themselves what is right and wrong.
What about children who commit serious crimes? Should they get similar punishment to their adult counterparts?
That depends entirely on their age. If they are young enough then the fault is mostly that of their environment. If you haven't taught someone under the age of 9 what is wrong and they are being told that the other is acceptable the responsibility is not theirs.
If they are old enough and it can be determined that they understood what they were doing and that it was wrong then they should be prosecuted accordingly. That is the legal measure you always have to prove, did the person understand the criminality of their actions? One last thing to realize in sentencing however is the likelihood of rehabilitation. As those under the age of 16 (or thereabouts) have a significantly higher rate of rehabilitation that should also be taken into account. If you take a child out of a bad environment and provide them with the right guidelines the ones who are not simply choosing to do wrong can change.