Bdtyktl

My children are tall;

My grandchildren are shorter, but sit above everyone else;

My name is a joke--the kind that immature children make;

Some hail me by another tag, but my first is more famous.

You must be

Uranus.

My children are tall;

Uranus was the father of the Titans.

My grandchildren are shorter, but sit above everyone else;

The Greek gods (quite a few of them, at least) are children of Titans, and they sit on Mount Olympus, above anyone else. (Thanks, Evargalo!)

The immature joke smells too bad to add here, but(t) what comes to the other name,

the Romans took all the old Greek gods and incorporated them in their pantheon with silly names like "Jupiter" and "Mars", so Uranus probably had a Roman name too. Caelus, says Google.

A possible answer is

Grandgousier

His child is

Gargantua, the tallest giant in François Rabelais' litterature.

And his grandchild is

Pantagruel, another giant, but less tall than Gargantua.

His name is a joke

Grandgousier means "big throat". That's the kind of funny-sounding names children (and Rabelais!) like to invent.

Some hail me by another tag, but my first is more famous.

Grandgousier is also the common name given to a family of big-mouthed fishes, the Saccopharyngiforms, but the litterary tag is more famous than the scientific one!

Caveat:

AFAIK, Grandgousier had only one child, and only one grandchild, while the riddle talks about children and grandchildren.