It takes some special kind of person to take a toddler's little arm and bite hard enough to cause pain to 'teach them a lesson'.
You don't actually know that is what happened, OP didn't seem to see any physical evidence of what happened. just that her child is adamant it happened and she believes them (if there was a physical mark or scar or teeth impressions she wouldn't be relying on her child to tell the truth, she would have seen it for herself) she was there immediately as soon as it happened so if someone had bitten them hard enough to cause pain there would have been evidence of it, I don't condone anyone physically punishing your child, but he could well have been crying from shock rather than pain.
If this sort of behaviour was acceptable and effective, why isn't this technique used by adults on other adults that they have authority over?
TBH this is such a ridiculous thing to say and I've seen it said quite a lot on here, it really isn't comparable at all.. if an adult came up to you and pushed you.. would you just stand there or would you push them back? What if they pushed or kicked or bit your child? Would you stand there or would you intervene and defend your child?
This wasn't some random attack from an adult to a child, it was one child biting, who at 4 is more than old enough to know that their actions are causing pain and suffering to a smaller weaker child and the adult intervening in a way they thought age appropriate to stop it happening/defend the younger child.
I don't agree with the persons actions AT ALL and would never tolerate someone doing that to my child, family member or not, but it is nothing like your boss biting you for not getting a project in on time FFS.. what a silly comparison.
Instead of making excuses about her 4 year old being tired and overstimulated, she should be safeguarding her younger child from his attacks and this probably wouldn't have happened in the first place.