Yes, the lack of sleep is less than ideal, but I find cake decorating and baking a stress reliever. Some what of my way to escape. We'll see if with time that changes.
As far as the logistics of it, I do have a system. I cook big meals for the family on Sunday, Monday, and Tuesday so they can mix and match leftovers for lunch/dinner Wed. - Sat. I really only bake and decorate Wed.-Sat. nights so there is less to clean-up in the kitchen. My husbands get's home around 6:00pm every day, we have our family time, then he takes the kids to get them ready for bed at ~7:30pm. I usually start cleaning then, and my baking/decorating gets underway by 8pm. On Wednesdays I make frostings and fillings and any fondant and gumpaste decorations. On Thursday I bake, stack, and fill. On Friday I ice and decorate.
As for how the housework gets done, everyone pitches in. The kids pickup their toys every night before bed, when they are eating lunch and breakfast in the daytime I get some cleaning/housework done. They are also at the age where they want to help with everything so I take advantage. I give them chores. They help load the dishwasher, sort the laundry, vacuum, pick-up toys and books. Th major stuff gets done Saturday night and throughout the day on Sunday. The dishwasher is always running in my house. I brought one that sanitizes and it was approved by the health department for sanitizing my cake stuff so that helps out a ton.
But yes, during the day it's all about the kids. We go to the park, library, do arts and crafts, and even have "school" a few times a week. I've found that keeping them busy during the day wears them out so they are in bed early, which give me more time to play at night.
I'm getting faster at cake decorating the more cakes that I do, so that helps to. Before I would be up until 3am working on cakes, but now I usually can get everything done between 8pm and 12am. But I sneak in naps during the day, if the kids nap, so it gives me a bit more energy at night.
I don't think if this wasn't so much fun for me, I'd do it, because it is quite demanding!