Kids are 4 and 7; they each get to choose one book (or chapter). Each child can listen to the other's book as well as their own, or go off and play during the other kid's book. They usually listen to both.
We sit on the floor. I tuck one of their pillows behind my back and lean against a wall. For a while, one kid sat on each of my legs, cuddled against me, but they're getting too big and heavy for that now

. They normally sit next to me.
For a while we used one of those big bean bag "chairs" on the floor. That worked pretty well too, but I think we've outgrown that.