I agree that your daughter is grieving. Becoming babylike is a natural way of asking for extra cuddling and tenderness – even many adults do a version of that in the face of heartbreaking loss.
Also, don't tell your daughter not to be sad. She has a right to her natural feelings, and will feel supported if you simply acknowledge, "Sweetie, you are feeling sad, aren't you? You wish Gran was still here. So do I. I wish I could bring her back for you. Here, give (stuffed toy) the hug you want to give Gran. And let me give you the hug Gran wants to give you.
Because your mom is still alive, it may help to establish as much contact as possible. Is she still near enough for visits? If not, use the telephone often. Your daughter may not be able to have intricate conversations yet, but just simple contact may mean a great deal to her.
Another helpful practice is to have your daughter help you make a photo album with family pictures, especially ones with her and her granny together. She can have a visit of sorts whenever she wishes.
My best to your family.