You sit IN a tree - the idea is that you've climbed up the trunk and are sitting on a branch surrounded by other branches and leaves. read more
You sit IN a tree - the idea is that you’ve climbed up the trunk and are sitting on a branch surrounded by other branches and leaves. read more
You also have to consider whether something is "contained" within the branches of the tree or "sitting" on the "surface" of the tree (imagine a surface defined by the tips of the branches). A cat climbing the trunk below the branches would be "on the tree". read more
If you were to say two people were "sitting on a tree" in this case, it would imply that the tree was on the ground. Sitting "in" a tree means sitting in among the branches, most likely at least partly hidden from view. read more