My son is fascinated by cemeteries. He lost his Pap Pap when he was almost 3, and we've always both been pretty honest and open with him about death, funerals, cemeteries, etc. since then. My hubby & I both work in industries related to death care so it's pretty normal for us.
I *would* however avoid ambiguous, creepy statements like "Abuelo is under here" and "Abuelo watches us from Heaven" That kind of stuff is what creeps kids out. I've always explained that a dead body is just a shell, not needed anymore b/c the spirit goes to Heaven to be healthy, healed, whole and the spirit stays there for eternity.
I'm not a big "grave visitor" myself but some people feel the need to go. And whatever sets their mind at ease is the right thing to do--for them. Why not stay behind/somewhere else while your hubby visits his dad's grave? You can take her n a few years once she gets the concepts involved.