TheBlonde looking at your messages again, I see that you don't mention if your MIL actually told you that the clothes she gave you were special. It's possible that she found them by chance, thought they might be of use to you, but it would be no big deal to her if you gave them away. You do say there is large box of them, so possibly they have not been sorted out.
So, if you are not sure how much sentimental value your MIL places in them, can you do some gentle probing, or get your dh to do some? Digest what is said then decide what to do with all the stuff.
Having said that, there must be something that isn't too bad and that your baby could wear a few times when your MIL comes round? No harm in that, is there? And you do say that your dh is an only child, so this is her only chance be a grandmother.
Now, going back to the example in my message, if I was to give a small, selected bundle of baby clothes to my DIL, I would make sure she knew they had special memories for me and I would like them back after she had finished with them - and would say of course I did not expect her to use them all.
If, to some of you here, this still seems OTT for an MIL to ask of a DIL, can I make an observation:
Supporting the idea that the DIL's baby is hers, hers, hers and she has total say so over every detail of its day and night, even at the risk of hurting others in her family, is IMO very much akin to a bridezilla attitude to weddings - ie that weddings are only for the bride and groom and no one else's feelings matter. I don't agree with that so that's why I don't agree with it being ok to be insentive to one's MIL over something like this.