What do others think

Say how flattering this is but how lovely they will soon have their OWN grandchild.
You may find once he/she is born they transfer much of their affection to the new baby. Perfectly natural.

Brilliant suggestion MawBroon and I'm sure you're right about things changing to a certain extent when their own GC is born so apart from going with Mawbroon's suggestion or something equally as good (can't think of anything myself) I'd keep quiet marysion which you've managed to do so far.

Its strange, but harmless, I would say..

Very disconserting IMO
I can sort of understand them referring to the children as their GC, I suppose it's like calling yourself auntie Mary to your friends children. My two had such an 'aunt' who spoilt them rotten in a way we couldn't afford at the time.
However, contradicting you like that regarding their expected GC is OTT unless she just meant that the intention was the children will continue to be treated the same and not forgotten.
I agree things may well change when the baby arrives.

I find it very strange when people do this, especially contradicting you about it being their first grandchild - that is too much. Hopefully, when the baby arrives they will be very involved with their grandchild and understand bounderies a little more.

Does it really matter

I'd let it go. If they've been referring to them as the grandchildren for all this time with nothing being said, is it worth spoiling a good relationship? I guess it would have been just as upsetting if they started referring to their 'real' grandchild in front of your grandchildren.

Do your grandchildren think they have 3 sets of grandparents? That would bother me I think, if that were the case.
Probably best to say nothing at the moment and see what they are like when the baby arrives.

The imp in me would put on my innocent face and ask them if there's a family secret you haven't been let in on, and are they really your SIL's parents.

They must be quite insensitive to say that to you, the biological grandparent, when they are just "adopted" ones. We had to call adult family friends Aunty and Uncle, maybe you could use that term to the children in a conversation in front of them. It's confusing for the children too, altho they all need lots of love, they should def know who is who.

I wouldn't worry too much, although it is very insensitive IMO, as when your GC get older they will realise the difference.

Sounds a good plan fiorentina - wait and see.
I think though at the time I wouldn't have said nothing but would have maybe lightheartedly said something along the lines of ''ah but wait til you get your own''
The clue is in the name ''grand PARENTS'' s

Sit down with your dgc and make a fun family tree so that they are aware of who is who in their family whilst explaining how lovely it is to have these 'extra' non-relatives who spoil them.
When I became very ill with incurable cancer I had 2 foster children living with us, 1 long term boy aged 9 who had been with us 8 years and 1 who we later saw onto adoption after 3 years with us. My DH and I needed help so that the children's lives were not disrupted too much whilst I was on treatment. We took up an offer from friends to take the children to our holiday home for us. (Incidentally, I passed on the fostering allowance to them whilst they did this) It wasn't long before we noticed that our lives were being overtaken, cloned, and we felt we were living in a movie (invasion of the body snatchers!) to the extent that these so called friends applied to become foster carers, amongst other things, the woman started to dress like me, and they bought an identical car. We later found out that their intention was to take our long term boy away from us. That's now 6 years ago and although my prognosis is no different we still have our DFS living with us, he is very much a huge part of our family and that of our own DC. There is a plan B in place within our own family if I don't make it til he's 18, which may not be. So what I would advise is that you be continually aware of the relationship that exists between these lovely extra GPs and your own DGC and make sure there is no ulterior motive. I don't think you need to tell the DGC on a daily basis but the occasional 'oh wasn't that nice of so an so to do that for you' wouldn't hurt.

To have a couple who love your grandchildren and are kind to them is really a good thing; there is always enough love to go around, and your grandchildren will not love you any the less because of this couple. It is a little odd, but I see it as harmless; the children will work the family relationships out fairly soon, and insisting on the couple acknowledging that they are not blood relatives will achieve....what?

My gd merternal gf and step gm, were very keen to see our gd. We met up quite frequently until step gm daughter had her 1st
Since then we have hardly any contact with them.
This I am told often happens.

Sounds as if this couple were impatient to be gps long before their dd ever became pregnant. Or maybe they were very close to sil when he was growing up and feel as if he is their son. Either way, it's very generous of them to be so good to your gc. But, imo, they were also filling some need of their own.

"Problem is they refer to the children as their grandchildren, even in front of me and my husband and other set of grandparents"

Do they do this in front of dd and sil, too? And are they ok with it? If so, then maybe it's better left alone. If not, then, imo, they should have nipped it in the bud, however gently. Kind of hard for anyone to tell this couple now, "No, you're not the gps, even though you've been allowed to think so for so long."

If you do say something, I would take MawBroon's suggestion.

As for the gc being confused, I'm sure they'll figure it all out in time. And easy enough to tell them these people are just close family friends of sil's who "feel as if" they are their gps.

I'd be more concerned that things will, in fact, change after their actual gc is born and that your gc may suddenly find this couple pulling away from them. I hope not. But be ready with extra kisses, cuddles and fun activities to share if it does.

My son's in laws have long standing friends who do not have grandchildren. They don't call our grandsons their grandchildren but they do act as if they are which I find very irritating as they involve themselves in family events and make comments which I feel are inappropriate from non-family. They have two married daughters so I can only hope !! My son once commented that they think they are surrogate grandparents ! However, they are really nice people so I grin and bear it.

Their focus will probably shift on to their "actual" grandchild once it arrives. If they are still a prominent fixture in your gc's lives, the children will work out that this is an honoury title they have given themselves and in the fullnesss of time they will appreciate that 3 sets of grandparents would be a biological impossibility. Slightly different I know, there were people in my life as a child who were called "auntie this" and "uncle that" who weren't relatives but friends of my parents, but that of course is quite common.

What age are the children? This matters, as they will understand more the older they are. I have experience in a way. Our good friends had twins, he mum and dad are alive so they are granny and grandpa. However, before the kids arrived he asked us if we would be " grandparents" on his behalf as his parents are dead. We are very honoured, the kids call us granny and grandpa. They are 7 and I ve no idea if they know or not we are not biological grandparents. We are very fond of these children but are very careful on our part not to overstep the mark re advice, gifts etc.

MawBroom your correct in what you say my sister was like that my DD had her own bedroom at my sister house she adored her then my sister got her own gd and promptly dumped her (my sister is 13y older than me) so what you say may happen they will transfer their affection to the new grandchild and it will be the children left behind wondering what they have done

There's enough in this world to confuse children about their family relations so I believe that the non-grandparents should sensitively be told that their behaviour is odd and they need to step back. You could ask how they might feel if their own GC when born, were to be subject to such confusion, and if you were to give it the impression that you were equal in your grandparent status to them. They'll soon see the nonsense in their behaviour.

How odd. I think I would have feigned dumbness and asked her what she meant. I always find that an arched eyebrow is worth a thousand words.

Like others, /I do think that things will change when their own GC arrives. Albeit perhaps subconsciously, they have been filling a gap with your DGCs and I think they may reach new enlightenment when the baby arrives! Their focus will shift and they won't want their GC to think they have favourites over and above him/her.
I think you have been very gracious and kind thus far - I would keep going as you have been if possible , but I don't think the occasional gentle corrective for your GCs - maybe through the idea of making a family tree or emphasising how nice it is that the couple now have a GC of their own when the baby arrives ... You could get the children to make 'Now You Are Grandparents' cards for them if you feel particularly mischievous!