MIL is a heavy smoker, however we have never let her smoke around DD and she opens the windows and back door an hour before we visit to the air the place out as she knows we don't like DD in smoky environments.
I have had to speak to her before about 'promoting smoking' to DD ( she pointed to unlighted roll up cigarettes and was saying 'look, these are Gran's fags' ) I told her I dont want her saying that, trying to imitate smoking or being around it, I find it vulgar. That was many months ago and we've had no problems since.
This weekend we visited, and she had a stick shaped sweet which she gave to DD and held in her mouth like a cigarette saying 'look smoke like Gran' 
DH sat there and didnt say a word, I had to tell DD to stop doing that, smoking is dirty. I then had to ask her not to encourage that behaviour.
I am annoyed that DH says nothing, we are both non smokers, he finds it as horrible as I do, and it is HIS mum. I feel he should speak up instead of waiting for me to do so, DD is his child too after all.
When we left I asked why he didnt say anything and he said he didnt want to offend his mum! AIBU in thinking he should speak up in these kind of situations?