Hi A.,
My husband and I adopted our daughter a few years ago. Like your sister, it has always been a matter-of-fact discussion around our house and among our extended family. With the young cousins, we focused on keeping the information age-appropriate and honest. Focus on the "age-appropriate." For instance, "there are lots of ways to make a family; adoption is one way" and "for some kids, the lady who carries them in her tummy is the same lady who is her mama; for other kids, they have a birth mother (the lady whose tummy the baby was in) and also a mama, the lady who loves and takes care of her forever." We've also found that, our worries notwithstanding, kids are often very matter-of-fact about adoption as well. In other words, they take their emotional cues from us. We don't offer details of the how/why because that is personal/family business and--as you say--not entirely appropriate for kids to know regardless. If they ask curious questions that we can't/don't want to answer, we just say, "that's family business" or we ask a question back to see what the kid is really asking. Oftentimes, curious questions from biological kids focus on their wondering if their family situation is permanent. Which is when we say, "I am G's mama forever, and your mama is your mama forever, no matter what." And definitely let him know that your sister IS his cousin's REAL mother just as you are his real mother, but his birth mother is the one who had him in her tummy.
I'm not sure how old your son is, but honestly, we've found that kids of all ages take their emotional cues from us. If you're matter of fact about it, he will be too. And if he asks questions that are not appropriate at the time or in front of the 2 year old, you can tell him you'll answer all his questions later. My advice is: don't worry too much. And don't give any type of legal/court-type detailed information. Just stay on message: kids come to families in a number of ways, and adoption is just one of those ways. So cousin's family is forever...and--OUR family is forever.
good luck! And email me any time if you have other questions!
E