Definitely the attic reno for a master.

I can’t recommend, as I know nothing about all the new stuff, but add some kind of sophisticated intercom system. And, most important, regardless of where you wind up:

https://www.puroclean.com/blog/fire-drills-teach-your-kids-a-skill-they-can-take-with-them-for-life/

Both options would include renovating the attic - would you rather a master bedroom or a den/office?

I'd rather an office, for the quiet and privacy. I've never like the idea of having a master on a different floor than the children's bedrooms, unless the children have a nanny sleeping in a room near them. And no to a playroom up there--who needs rambunctious children playing on the third floor?

I don’t mind being on a separate floor from the kids (we have a first floor master with the kids rooms on the second floor)... daughter is 4 though so we still have a baby monitor in her room which she knows she can talk to if she needs something. Get an intercom and build the master of your dreams

I think it depends on the age of the kids and as for a play room it should be on the main floor if the kids are small . I actually think huge bedrooms are a waste of space but I do like a master bathroom.I certainly would not want the playroom in my office . I would like to see a floor plan of the 2nd floor . We had an attic conversion in our last house but no kids we loved it we put an office at one end with a large dormer out the side for the ensuite this was a very tiny house