The answer to these kind of questions varies from culture to culture and region to region.
In my community, the general thumb rule regarding this is, what do that person's cousins/step-siblings call that person? The same applies to that person.
For example, if my sister has children,
- My sister's children would call my parents
nana and nani (their mom's parents)
- My children(I am male) would call my parents
dada and dadi (their dad's parents)
Extending the same nomenclature,
- My sister's children would call her in parents in law
dada and dadi (their dad's parents)
- My children would my parents in law
nana and nani
But,
- What do my children call my sister's in laws?
- What do my sister's children call my in laws?
There is no separate name for these relationships. So they fall back on what their cousins call these people. Therefore,
- My children would call my sister's parents in law
dada and dadi (because that's what my sister's children call them)
- My sister's children would call my parents in laws
nana and nani (because that's what my children call them)
Extending the same logic, what would this child's step children call you? That should give the answer.
There can be all kinds of grannies, big and small, young and old! There is(or used to be) a big age difference between the mum's mom and the dad's mum so it's nothing unusual at all.
However that's just how things are done in my community. You can decide whatever you want them to call you.