Reasonable expectations for a grandparent taking grandchild/ren?

Your husband sounds like a total mummy's boy - he needs to step up and sort this shit out! It should not be down to you to deal with his domineering mother. However, I do question how grown women who are mothers allow themselves to be taken advantage of like this. You are a grown up with your own child to think about - FFS woman take a stand! I would not allow anyone who smokes anywhere near my young child (if I had one) - this is your child's health at stake, you need to learn to just say NO!!!

Just saw that I have recieved more input! Thank you all so much. It's all very encouraging and helpful and some different perspectives in there as well.

My mother in law has been asking my husband why I don't like her recently, since we haven't been letting her take our daughter the past few weeks. (We still have been visiting with her collectively though and even took her out to dinner for Mother's Day). I am kind and respectful towards her so I find it strange she is asking him this. Up until recently, we haven't really told her no though, so I can understand if that is difficult for her. I think she blames me for not being able to take the GC whenever she likes, even though we've been trying to present a united front. Maybe I'm being thrown under the bus though.

I am wary of her wanting to see our daughter apart from us so frequently. She says it's not the same with us there. I wonder what she wants to do that she cannot do with us present? The more she pushes for it, the more concerned it makes me feel. This doesn't seem normal to me..it seems like a red flag and I am starting to suspect either a desire to cause division or have a do-over as a mother? It does sort of feel like a custody arrangement, as someone said.
I believe if she wanted a healthy relationship with her granddaughter, she would just be happy to see her and whether we were present or not wouldn't make a difference. I can't make sense of it..it feels like we are being pushed out. But if someone has another perspective to offer on that, I am open to it. I was reading about narcissistic grooming so I could be being paranoid...haha...

In light of the fact that she smokes in her car and so her car, and the carseat she keeps in there, smell of cigarettes...I have no idea if her taking the GC will be able to happen anymore, even for a few hours. I feel terrible about not speaking up about the cigarettes sooner and just thinking of all the times my daughter was already exposed to that..but it's a tricky situation and we haven't found a way to relay this to her yet...I think she would be devastated.

In all honesty I believe her life revolves around the GC a bit. She's had some diffiult things going on in her life so I think she uses my daughter as a crutch. I understand it on some level, but I also feel it is unfair.

you don;t need to understand her or why she does it or what it really means etc.
do not waste time and attention on that.
all your attention needs to be on your child and her needs, keeping her safe. she cannot protect herself, you must do so.
if you don't put her first she will resent you later.
by the way, keep on reading about narcissistic grooming...