Right. Will try and answer some questions raised 
DH and I are paying for half of the wedding - my folks are paying for the other half.
Nephew is a baby, but not a young baby (11 months?) I've only met him the once - quite a cute little thing actually. My reason for not wanting him there is not about him. I just simply want a child free afternoon! (apart from my own!) My own goddaughter isn't invited but her parents are, and if anything, I would have expected them to have an issue, but they simply said they were looking forward to an afternoon without the kids! (especially as it is only 4-5 hrs)
DH thinks child free is great. The comment about the focus being on him, was more as a response to MIL kicking off and saying that nephew was her world, and DH saying well surely I should be your world on my wedding day. As in, surely for just one afternoon, MIL can give her own son some attention.
Also, MIL has paid no attention at all to our baby DD since she was born, so I though it would be nice if DD is only baby there and MIL can actually lavish some time and attention on her for a change?
BIL is not invited ...a. because MIL and FIL don't speak to him and don't accept him as part of their family. Something to do with some kind of dodgy activity but not sure what!
b. because DH hates him (again, something to do with above but not sure of all the ins and outs!)
I have never met BIL. When sister goes to Mil's house, BIL is not welcome.
It's a very small do - we have split the list 3 ways, some for my family, some for MIL's family, some for our friends. When DH asked for addresses to send the invites to MIL's side she kicked off and said she disagreed with who he wanted to invite.
So DH changed the guest list on that side to keep MIL happy. There are some odd invites - as in, an aunty and a daughter, but not the uncle.
Invites were addressed to Mr and Mrs So and So. They were quite clear (I thought) about who the invited person/persons were.
I totally take the points though about letting nephew come to keep MIL happy.
I just feel aggrieved on DH's behalf that on the one big day in his life she is adamant she won't be happy there unless her grandson is in her arms. Surely she should be wanting to focus her attention on her own son for once? Surely she can do without her grandson for 4-5 hours?!
Oh. Whole family dynamics on DH's side is drama drama drama!!
Anyways. She's now made things perfectly clear that her focus is her grandson as she's thrown the rattle out of the cot and refused to come to see her granddaughter (my DD) this weekend out of protest!!!!