D.T.
I'm sorry for your loss.
My beloved Grandmother died last summer and we did this, the boys went to the viewing with me. They also went to the funeral. My husband has a phobia about dead bodies so he kept the boys with him well away from her. (he didn't attend the veiwing)
I showed the older boy that this was more than laying still on the bed. She was cold and didn't look pink like he and I did. That was because all the great things about her had moved from her heart to ours. She didn't need her body anymore so we were going to say goodbye to that. It's just like Church, lots of music and people speaking because it's a special way to say goodbye.
The burying is just like planting a seed. Here will always be a place that she is buried and from that spot grow warm feelings that you can come visit and talk to her there.
To ease her need to express her love, give her a bear or animal that was special to your grandmother then have her hug and kiss it. There may be an occasion that you could put the toy into the casket and she will know that her love goes with Grandma to the grave.
Death is just the end of life when our love and life goes on without a body. It lives in our memories and the little things we do just like Grandma. {I sew and crochet and hum or sing at the weirdest times.}
For now just cover dying of old age and what ever your religion says about the afterlife. One way or another she needs to be reassured that the love Grandma had for her is still there and always will be.