Can't tell if your DD was genuine, rude or just a bit attention seeking.
Fat is not something to be ashamed of, and ideally would not be seen as a negative or insulting term. However since it still is, I would present this to your DD not as an issue with fat, but with being careful when saying things about someone's body or how they look....since though it is ok that everyone is different you never what they may be sensitive about.
Size 16, dress sizes generally, are not a reliable guide to bmi. Size 16 wearers I know vary from not being overweight at all, just body shape leading them to a 16, to being obese. Not morbidly....I doubt that would work with a 16!
Also, it is important to eat healthily and exercise but please do not do as suggested above and tell your DD that is all connected with a flat tummy. Many thin people eat very badly, do little exercise, and often have a great deal of fat around their organs. Many people with larger tummies are far healthier. In fact, in general being at least a bit overweight apparently has a protective effect....it is associated with longer life expectancy and better health outcomes generally. Counterintuitive to me, but apparently it has been questioned and challenged many times by disbelieving scientists and the data remains strong so far.