I’m in agreement with those who say the child needs to lead the way: in who she calls what, in the questions she asks. The most important thing for all the adults to do is to avoid telling her things, unasked, and instead to be responsive and open any time she asks a question. That way she will know she can ask, and she will ask only at the level she is ready to hear.
I think it’s good to avoid correcting her directly, but the adults to continue to use the appropriate names for people: Grandpa, Jenny, Grandma, etc. She will work it out in her own time.
When she wants to know why she can’t live with her birth mother and the new baby can, it’s great to use language like ‘when you were born, mummy wasn’t well, and wasn’t able to take care of you. You were so special and scrumptious (sorry, a particularly English word!) that Grandpa decided there and then that you would live with him instead! So he adopted you, because we didn’t know if mummy would get better. But then she did get much better, so Grandpa decided he didn’t need to adopt the baby, which is why the baby lives with mummy and you live with Grandpa and Jenny and <all the other names of people she lives with>
My favourite book of all time for any form of family is Under the Love Umbrella by Davina Francesca Bell (no idea if available in the US but I assume so). It’s a picture book perfect for her age, with a simple poem running through a line per page, all about no matter where you are you will always be under my love umbrella. The key is in its simplicity — the words only include ‘you’ and ‘me/I’ so there is no gender indicated. And the illustrations are beautiful, and represent every form of family you can think of. For this little girl it sounds like she might see herself in several different versions of the illustrations to cover all the different homes she is connected to. It’s just the best book to tell any child that they are loved even when you aren’t with them.