As others have already mentioned, it often happened when children were born over a long period.
For example, my dad was the eldest of six children. His youngest brother was born just a couple of months before my dad was twenty.
I have a photo of my mum (pregnant with me), shortly after their wedding, and in the photo was my uncle who was then six years old.
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Sometimes there was even the case of a granddaughter being raised as a daughter.
For example, my first cousins twice removed (so, my grandmother's cousins), sisters Joyce and Barbara. The eldest sister, Joyce, was 17 when her youngest sister Barbara was born.
Joyce got pregnant sometime around her 17th birthday to a guy who was in the US army and stationed nearby (about the same time that her youngest sister was born). He then left the UK and Joyce was left as an unmarried, pregnant girl of 17.
From there, her parents raised the child, Denise, as though she was their own, rather than Joyce's daughter.
Joyce married the following year when she was 18 as she was then pregnant to another man and gave birth to her second child 18 months after Denise.
So, Joyce's sister, Barbara and her daughter Denise (born a year later than Barbara) were raised as though they were sisters.
I really do wonder what the fall out was when Denise found out that Barbara was actually her aunt and not her sister? And the people she knew as her parents were actually her grandparents?