It was quite rude to un-invite your DD, but other than that I don't think they've done anything wrong.
YANBU to not go if you don't want to go without your DD- either your DH could go alone or you both politely decline the invite. As long as they accept your declining their invitation with good grace, I really don't see the problem or any reason to be very upset.
I don't get this "family children are different"- I don't think it necessarily does. Doesn't that depend really depend on how close you are as a family? If I was limiting children, I'd rather have the children of close friends, who I have a relationship with than my nephew who I see once in a blue moon (and don't get on at all with my DB and SIL).
And surely if the couple don't want children (even nieces or nephews) at their wedding, then that's up to them- no need to get excited? As long as they don't get annoyed if those guests who have children don't want to/can't come to their wedding as a result.
Contrary to the advice of some posters, I wouldn't be running to your MIL to try and get her to intervene- the guest list isn't anything to with her (unless she's paying for the whole thing) and dragging is likely to lead to further resentment on all sides. If my MIL tried to tell me who I had to invite to my wedding, I'd tell her I was sorry she didn't agree with our decision, but would politely suggest she mind her own business. If she threatened not to come to the wedding if we didn't invite someone, I'd be upset on my DPs behalf, but I don't think I'd let her dictate how we did things.