Presumably he is offended that you dislike his mom so much, and told him so.
Not saying you are wrong to feel like that about her, she does sound rude and annoying.
But it's still his mom.
I know on Mumsnet everyone goes NC with their parents/in-laws/siblings etc at the drop of a hat, and it's seen as a pretty standard move, but in reality, in my experience the vast majority of people (certainly ones I know) love their parents even if they don't think they are perfect, and would feel extremely defensive and pissed off if their partner said they disliked their parent and never wanted to see him or her again.
I don't know what the answer is, because I don't think it can be good for your mental health to have this woman coming round shouting the odds about the nappy brand you use (FFS). However, I don't think your partner was ever likely to go, of course that's fine, I totally understand why you hate my mom and wish to cut her off.
Everyone will say your dp's loyalty should be to you..... But I am sure he would prefer not to have to choose.
He probably doesn't literally mean his happiest times are with them - people say hyperbolic things when they are hurt and defensive.
Rather than not seeing her any more, could you ask your dp to maybe have a word with his mom about the way she speaks to you and how it makes you feel?
Good luck.