I always knew I wanted kids, so it's hard to answer w/r/t "how do you know/decide" - but I will say that we never felt "ready" for kids.
I have four, and while of course I can imagine a life without them and how much easier it would be, I also know that my life would feel far more barren and lifeless without them. They bring a special kind of joy that nothing else can.
When we got married, we planned on four kids. My husband comes from a family of 10 kids, I come from a family of 3. We knew we wanted a happy medium - 2 didn't seem like enough, 3 felt uneven, more than 4 was way too many. But we never tried for any of our kids. The first two were a result of not being super careful, the last two (twins) were proof that condoms are not 100% effective even when used correctly despite being almost obsessively paranoid about it. Happened anyway.
Had we waited until we felt ready, I'm fairly certain we would never have had any of our kids. It's a huge, life-altering undertaking. So as others have said, sometimes you have to take the leap even if you don't feel ready. I don't think we felt ready even after having the entire pregnancies to get used to the idea of another one. You just do it.
That being said - don't do it if you aren't sure. There's a difference between not feeling ready and not knowing whether you even want a child. No child deserves a parent who makes up his/her mind after the fact and potentially discovers yeah, I guess I really didn't want this kid.