My ex's mother used to do this with my son (12) when he was too young to speak for himself... so, round about 2 to 3-ish. He would go to visit his grandparents in, say, a pair of jeans, a plain tee-shirt, trainers... and he'd come home in a shirt, a pair of smart trousers and unlaced trainers.
The first few times, I thought "well... they see him once a fortnight for a few hours (their son's choice, incidentally, not mine), and it's not really hurting anyone if they dress him up" - until my son asked me why they would change him out of "those horrible clothes" as soon as I'd left him in their care.
Let's put it this way. My ex-MIL discovered at that point the first uncrossable line in the sand of my family. My son - like your daughter, OP - liked to choose his own clothes at that age. It's their first step on the road to independence. They would denegrate the clothes he was in, presuming that it was my choice... not his. And, in the process, they made him feel like shit. Like his thoughts, and opinions, and choices... didn't matter.
They didn't do it again after I told them point blank what they'd done to their only (at that point) grandson. His father... oblivious to it all, I'm afraid. What his Daddy and Mummy say/want/think, is what he goes along with. It's partly why he's my ex. However, the children from his second marriage are still enduring what my son went through, because my son's stepmother is too afraid to rock the boat on her babies behalf.
My son says he feels sorry for them.
I simply feel sorry for his stepmother who hasn't yet found her titanium spine.