When a hatchet or axe contacts the material to be chopped, there is a substantial amount of stress applied to the metal of the blade. When the blade is undamaged, this stress is applied very evenly.
The crystals in the metal were in good shape before the offending whack, but afterward their boundaries and internal structures get all screwed up. Basically, the area around the ding becomes somewhat brittle. The metal there is now weaker than it once was, and is prone to cracking.
The deformed shape concentrates stress at the deformity, perhaps 5x what it was before. Thus, a higher stress is applied to weaker metal. Cracks can propagate through the blade.
Most fire departments keep their axe blades unpainted so that cracks may be seen. The way I learned to sharpen a fire dept. axe was with a file. First, file out any deformities. Then put a cutting edge on the axe. Last, blunt the edge just a little by deliberately filing the fine edge flat. This makes the edge more resistant to damage. (Your hatchet may be too hard for a file.)
But then, these kids are not exactly chopping through a roof or prying doors open with the strength of a full grown man. Nor is a hatchet as heavy as a fire axe.
I'd suggest the above procedure as an acedemic excersise, to teach the kids how to care for their tools. It is overkill, but they may decide they want to be more like firemen than "axe-murderers."
Scott