She could be intrusive and bossy, or she could feel a bit inadequate and nervous about caring for an infant after all these years. Or somewhere in between. Sometimes the bossiness is really her trying to convince herself that she knows what she's doing, that she remembers everything from when her kids were little, or that things haven't changed too much for her. If your baby is breast fed, then she may be worrying that SHE'S not doing a good enough job when you aren't there. She may be insecure or even jealous that you are working. She may think working is wrong because it wasn't done in her day. She may feel that you doing things differently from what she did (or what she remembers she did) is a challenge to how she raised your husband.
I guess I would suggest that you choose your battles. If she finds a way that he likes to be held, fine, tell her thanks and that you'll add that to his other favorites or that it will be her special hold for him. If she thinks he's hungry, then take him away from her and say, "If you really think so, then give him to me and I'll nurse him." If he isn't hungry, say, "Well, that wasn't it. It sure can be hard for us all to figure out what he wants, can't it?" I'd let her buy the diapers if it makes her feel useful, as long as she doesn't throw it in your face. As for how the clothes fit, ignore it. For medical things like gas drops and more, say, "You know, as soon as you raised that issue, I asked the pediatrician about it. She says XYZ so that's what I'm going with. But I'm glad you brought it up so I could check." If she goes overboard, leave off the "as soon as..." and "I'm glad you brought it up" and switch to "I'll add it to the list of things you've said and will ask the doctor at the next visit." Make a point of keeping a list handy and then you can keep her from repeating herself by saying, "Yes, that's already on your list." If it's a long list (!) then make a joke saying, "They're going to charge me an extra co-pay if I have more than these 15 questions, Mom!"
It's so hard when you're figuring your own way and then someone gets in there and challenges it. I think you can reassure her and say how great it is that he has her in his life. As he gets older, she'll be able to engage with him in more ways. If she oversteps her bounds, your husband can step in and say, "Gee Mom, you aren't saying that S. and I don't know what we're doing, are you?"
My MIL was kind of a pain in many ways - mostly a worry-wart - but she did drive me crazy. (When I was taken to the ER by ambulance, she called there and made the nurse put me on the phone, telling me I needed to call my husband because he was so worried about me!) She died when my son was 18 months old, and I do wish that he'd had more years to watch her nonsense and enjoy her company.