Difficult sister-in-law

I don't see why she would make you feel inadequate. In fact, she can't - only you can do that. Why have any concern over her 'comments', when they seem quite ridiculous to me - and others, I'm sure.

All hands to the pump, you DSiL could help, after all she is family not royalty.
When we all go away the whole family chips in. Last time a broadsheet was made and everyone filled in with the meals they would bring the ingredients and cook. Men as well as women cook a meal.
For the big family feast meals each brings a course.

Ask yourself why she makes you feel inadequate? You are the one with a loving family home where your grandchildren love to come. You are the one who does not criticise people unnecessarily. You are the one who is going to let her comments fly over your head, your DH on the other hand should quietly ask his sister to not make derogatory comments on your meal planning etc.

Just smile after she has gone, and know that her life is probably lacking something to make her this way.

is the inadequate...

Someone who is openly critical in someone else's house in the inadequate one.

No need or reason to feel uncomfortable. You are different people and if she invites you and is pleased to see you she may have no clue you feel like this.
If you invite your GC over while they are with you maybe avoid a sit down meal, have a buffet or no meal at all and plan a walk where the children can have a run around. Just ignore any comments about how your GC behave in YOUR home or maybe your dh, her brother should respond. What does he think about this?
Does she have GC? I rather think not.
Don’t get upset about this, there is no need to I feel inadequate. She is clearly a strong say it how it is character who doesn’t see the offence she is causing.

You'll never match this woman's standards, She just doesn't understand the love, happiness and security you are providing for your lovely grandchildren.. They must feel so happy in your home free to be themselves. Rejoice in that and let her be a miserable old sod on her own..

Sorry....why are they coming? Have I missed something?

Certainly tell your DH NOT to invite the grandchildren while his sister is visiting. Be frank and say her comments on their manners drive you mad.

Have you ever tried requesting this lady to keep her opinions to herself until or unless asked for them?

If you feel that is too forthright, smile when she airs her opinions and say, "Yes well, we brought our children up differently, but things change, don't they?" then change the subject.

Sit down and think out a list of innocuous topics of conversation, you can deflect her remarks with.

If she has the bad manners to criticise the food you make, smile and say, "Yes, well I didn't know what to make, as you are such a fussy eater, so I just made something your brother likes!"

Just make sure DH does like it!

She sounds a pain in the a** and I wouldn’t have her in my house.
I certainly wouldn’t stop my GCs from visiting at the same time , in fact I would revel in them being on the floor and being their glorious happy selves in your lovely warm, inviting and comfortable home.