I have a DD of just over a year, who is the only female GC in DH's family. SIL, for years, very much wanted a girl, but had boys. As a result she is keen to be the favourite, "fun" auntie. I think she means well, but DD can take a while to warm up to people, and SIL tends to bounce up to her right away, be a bit loud and over the top, try to take her out of my arms, asking for kisses and hugs. DD then gets a bit upset and tends to cling to me. SIL sees this as evidence that we have spoilt DD. I still breastfeed too, which she is very 
over.
Recently, now that DD is more mobile, she has started a new "game" where she basically entices DD with a toy or a set of keys or something that DD wouldn't usually have, then she corners her/blocks her ability to crawl away, and dangles the thing out of DD's reach so that DD has to pull herself up on SIL's front to try and get the item (if that makes sense) SIL will then restrain her and start going all "yes that's right you LOVE Auntie, Auntie is the BEST, you're giving Auntie the BEST HUGS" and then if DD tries to get away she'll just hold on to her.
The first few times I let it go, but then it kept happening basically every time we saw her, so when she started dangling the item, I just said "please don't tease her, she doesn't like it" and lifted DD away. SIL then did an eye roll and gave MIL a look, and I just know that'll be a whole big discussion behind my back about how spoilt and precious DD is.
Am i being oversensitive? I know that SIL just sees this as being affectionate, but I really don't like it and it makes me uncomfortable to see my child effectively restrained and frustrated. SIL's boys tease a lot, to the point where I feel that although it starts out as fun, it ends up betti g quite nasty, and someone is upset and crying, and I just don't like it. It's very much seen as "boys will be boys" but I have a much older DS from a previous relationship and he didn't behave this way because I simply didn't let him.