I discipline my children. I hold them up to expectations, and my expectations are fairly high. If they step out of line, they will be disciplined. And, yes, if it's bad enough, I will spank them.

I am no fool. Children are children, and mine are no different than any other kid when they start playing with other kids. They can get caught up in the moment. I'm referring to my little ones, in this instance. They also can be easily swayed and influenced by other kids, especially when they spend enough time with the other children.
Like most kids, my children are loving and kind. We have taught them to embrace others without prejudice. We expect them to be kind to others and to treat other people with respect. We keep them in good neighborhoods (although we would prefer them to be inside on computers than play with a raw mixture of unattended children out and about in the neighborhood. As a matter of fact, we would prefer they stay in our own yard. Who knows what is beyond that?)
Of course, they aren't perfect. And when they step out of line, like I said, they get disciplined.
If your children are playing with my children, I expect you to have similar expectations of your children as I do of mine and I also expect you to discipline your children, or it's just not going to work out in the long run. If you refuse to discipline your children because you "love them," or better yet, medicate them because you cannot "control" their behavior, sooner or later, this situation isn't going to work.