OK, bit by bit, let's take this. Firstly, the venue for the wedding, is this somewhere near where the bride's family lives or a venue that means something to them? If it's just the wedding ceremony, does that mean they have picked a small group of people who mean a lot to them to spend the day with but are having 'big extended friends and family' to the wedding party a later date? That means they've decided you are one of the important people in their lives. This isn't an insult, you've been selected as 'close'.
The very fact that it's your MIL's birthday might be why they've decided to separate the wedding ceremony from the party - it could well be that they think it's fitting to get married on her birthday with just people who are close to them (as it'll be an emotionally charged day) but don't want to throw a party on that day - that seems very considerate to extended family's feelings. This is your BIL's mother we are talking about, not yours, if he wants to mark his mother's birthday in this way so it's never forgotten between him and his DP, that's a really big gesture.
When you were told - normal etiquette for a wedding is to send formal invites 6-8 weeks prior to the event, however as that is rather short notice, so as you might have had something else going on, they've contacted you to ensure you can hold the date, as I guess they aren't planning on doing "save the date" cards as well as invites. That's actually rather considerate - again, they obviously want your DH (BIL's brother) to be there and are ensuring that you can all make it.
Re travelling with a toddler, 3 hours away isn't bad you know, it's perfectly do able. If you really think it's going to be a problem, go the night before and stay over so you only have to do the drive one way on the day.
But most of all, you are acting like you are the key person in all this, it is BIL's mother who has died, I know several people who got married or engaged shortly after a parent dying as it made them stop and think about what was important to them - I can also see that if his engagement came close after his mother's death he wouldn't want to throw a big engagement party or make a big fuss about his engagement at the time. It might be all linked in his mind to losing his mum.