I just checked with Pepper. She said she knows she's a dog. She said if she was a family member equal to one of the kids, she wouldn't be allowed to bite me since only babies and dogs do that. It's a game. If I get close to the kids in her presence, she gets between us and starts growling. If I grab one of the kids (normally in jest to play along), it's game on and she bites my arm. Not hard. Just enough to make it known she knows what she's supposed to do. If someone she doesn't know gets close to the kids, it's the same process but no longer a game.
Our house is a multi-level. She (Pepper) is only allowed on one level (where my office and family room are). It's ground level out the back of the house. The levels above that (living room, kitchen, dining room and above that, all the bedrooms) are off limits. The level below the office/family room is the finished basement. She's allowed down there only when someone else is. There's a pantry down there and I don't want her helping herself.
Since I'm in my home office 8+ hours per day and when the kids get home, at least one of them is in the family room or outside, she's at our side at least 12 hours per day. That's cool by her.