As the form says, the "number of people in the household" is distinct from this number. The rules for "dependents" is in IRS publication 501. Obviously, anything that you can legally claim as an EXEMPTION is good. Then there are a few things in 501 where you meet the test for dependent but don't qualify to claim them as an exemption. I suspect the "younger child" that you aren't claiming (presumably you have an agreement with the other parent) meets this if you they live with you and you are providing a majority of their support.
I suspect the two stepchildren (the IRS lumps children, stepchildren, and foster children together for this) don't meet the tests (support/residence). It's unclear if your father does or not. If he meets the support test and makes less than $4050 on his own, you can count him.

