My DM was and still is like this! I'm her only child so my dds are her only DGC. She spoils them so much!
I felt a bit overwhelmed by it all for a while; I felt my space aa their DM was being invaded, if I am brutally honest. But, as the years have passed (dd1 is almost 6yo) and the relationships between me and my dds have developed, I realise that it is okay for them to have these two very important and very central women in their lives (me and my DM). My confidence as a mum has grown. I am their Mum. We all know it
So the competitive thing I once thought was there has dissipated.
I also relalise that this a way for her to demonstrate how much she cherishes my dds
I'm so lucky to have her as my DM, ans my children are to have her as their DGM.
Christmas is a stressful time so I wouldn't say anything just yet. However, you should say something about her always arriving with a present: my DM used to and when dd1 got to be about 4yo, waa mortified if my DM arrived empty-handed. Usually, a packet of sweets is all that is needed if my Mum wants to bring something ans it not always be a new toy or item of clothing.
I agree with what has been sais upthread: pick your battles. Going off about a sweet suggestion about pyjamas on Xmas Eve will upset her, will make you feel awful and is just not worth it.
OTOH, if your DM tries to step in over their dietary habits, or who they should be friends with, then that's another matter.