Nicole,
There are several places to dine with the princesses. Some of my favorites include;
Cinderella's Royal Table (Magic Kingdom) - Your daughter meets Cinderella before you even get to the dining hall, getting a personal reception, along with time for photos and autographs. Then when dining they announce as each princess visits the hall, typically including Snow White, Ariel, Sleeping Beauty, and Belle. They then migrate from table to table meeting every table in a predetermined path.
Akershus Royal Banquet Hall (Epcot) - About the same process goes on here, typically with Belle as the princess greeting them into the restaurant, though that can change at times. The array of princesses here can be different, as they sometimes have the same set as listed above, with some others (like Jasmine), but you can never be sure who might come by.
As for announcements, I don't recall there being any birthday announcements, though I expect you would find them doing something. The real key here is that just being there is a special occasion, so I would not worry about that too much. Most important of all, be sure to let them know when you make the reservation of the special celebration, as that will put any action in motion on the restaurant's part.
Please write me back if you have any follow-up questions.
Have a magical (and delicious) vacation!