Well said Cazzacaz. Yes, as amply said in the preceding pages, your DGS's reaction is normal. It is the importance that your DD attaches to it that is out of kilter. It is affecting her relationship with her child, impacting on their time together and that is when it starts to get difficult and what she needs help with. She is talking about putting him in nursery and going back to work full time - is she finding it hard to cope or does she see this as a sort of punishment for him for preferring his father? She needs to separate the behaviour from the child as this sounds as though she is letting this spoil the time she has with him when dad is not there.
You say she had a difficult pregnancy Wellington, has she been to see her GP lately. If her self esteem is low and she is letting this issue get out of proportion to the extent of having such an impact on her relationship with her little son, a visit to the GP to ask about postnatal depression, talking to the Health Visitor or going to her local Children's Centre (if she's still got one nearby) would all seem like sensible moves. She needs support but just telling her that it's all perfectly usual behaviour for a child of that age won't do it, as her reaction to it is not usual.
I wish you, your DD and your DGS all the very best and hope she gets the support she needs.