Sometimes, adult children don't realise how their parents health is changing and just don't think. And to be blunt, sometimes they don't want to acknowledge it, as its inconvenient.
You are 80, no matter how fit and active, your energy levels and capabilities will have changed and your daughter has been a little selfish and blinkered here and you should have spoken up. That's before we look at caring for your husband.
You need to have a sit down chat with your daughter and her husband. Just explain that wanting to look after your baby grandchild and being able to, are two different things and that you have realised, its not something you can now do now, despite wanting to. I have worded this as a letter but it can easily be said in person:
"I love being part of the children’s lives and I’m glad I can help with school pickups and caring for them after school. However, I need to be honest about my limits. At my age, and with the responsibility of caring for your Dad as we manage dementia, I simply don’t have the energy or strength to take on full‑time care of a baby for X hours a day. I am a lot less able than when I looked after your first two and I don't think any f us considered this and its just two much for me.
Looking after a baby requires constant attention, lifting, and recovery, which is too demanding for me now. I want to continue being a supportive grandmother, but I also need to protect my health and ensure I can keep caring for your dad and the older grandchildren without becoming overwhelmed. and even this may change if our health changes as its likely to do as we are at that age now, where our abilities maybe be restricted whether we like it or not. Dementia can change quickly as it develops and I don't know what the future holds.
I hope you understand that this decision comes from love and practicality. I want to remain present in the children’s lives in ways that are sustainable for me—such as continuing with school pickups and spending time with them when I can. For baby are, I need you to explore other childcare options that will give you peace of mind and ensure the baby gets the attention they need. I'm willing to give you a few months to sort this but I need you to understand its just becoming too much for me.
Thank you for understanding and respecting my boundaries. I know we all want what’s best for the children and for our family as a whole."
Obviously tweek this with names and make it more personal but I am sure you get the idea, this is you looking after th welfare of your family and your daughter has been very lucky that you have been in a positionn to fully support her historically as its not a small ask.