Dutch media reported that the children apparently had no contact with the outside world and lived on a vegetable garden and several animals on the farm.
The older man was reportedly ill in bed after having had a stroke several years ago. According to RTV Drenthe, the children had no contact with the outside world, and neighbours had no knowledge of them at all.
Local news station RTV Drenthe, which first reported the story, said the family "have been living in a basement for years, waiting for the 'end of times'." Some of those freed "had no idea that other people existed," the station added.
The farm is hidden behind trees, and difficult to see from the main road.
Roger de Groot, mayor of the village of Ruinerwold, told a press conference that the man arrested was not the father of the young adults, aged between 18 and 25.
He added that their mother is thought to have died before they moved there around nine years ago and some of the children were not officially registered.
"I have never before been involved in such an extraordinary situation," he said. "A man has been arrested by the police and his role is being investigated. Our first thought is of course for the people found in the home. The family is in a safe place, getting care and attention, and they need rest.
"I understand that there are still a lot of questions, and we have them too. The police is investigating many scenarios and we cannot share any more about them at the moment. We are focusing on caring for the family."
On its Twitter feed, the Drenthe police force said that it was investigating the situation with a forensic search of the farmhouse, a study of the area and neighbourhood, and mapping the entire hidden-away location with the help of a drone.
The force is also talking to the people discovered on the farm, although earlier reports said the man arrested was not co-operating.
Mr Westerbeek, the cafe owner, added that the man talked in a "child-like" way, had long hair and a straggly beard, old clothes and said he had been inside for nine years.
"Later he said he had a brother and sisters who lived in the farm. He was the oldest and wanted to make an end to the way they were living."