Hello Chadsky - I agree with others that names can get muddled easily, but I do understand your uncertainty about what to be called as you and your husband are now your 3 year old granddaughter's main carers.
It is difficult to respond constructively, with such limited information, but I'm not asking you to say more than you choose to on this forum. I believe the most important thing is the obvious thing, that is to respond to her questions in an age appropriate, and positive manner. If you create an atmosphere where the family history is talked about honestly, but sensitively that will help her continue to make sense of things as she grows up. I don't believe there is a one off answer to your granddaughter's questions. This will be something that comes up throughout your lives, as she grows up, her understanding develops, and more questions arise.
I accept the advice of others here, that you are grandparents, rather than birth parents but your role has changed. Biologically, you remain grandparents, but on a practical level you have become 'parents'. You will be setting boundaries, and creating an emotional atmosphere your your granddaughter, in a way that birth parents usually do.
Children want to be like everyone else and your point about the influence of nursery is spot on. Schools and nurseries tend to operate still, as though each child in the class has a mummy and a daddy, they love and live happily, and safely, with. This is so far from reality, and I'm surprised there isn't a more thoughtful and considered approach within schools and nurseries, around for example, the making Mother's Day Cards. The emotional content of a simple activity shouldn't be under estimated.
Have you thought about putting a journal/story together with her, including photographs of her birth parents and a simple explanation of why she lives with you. It's something you can build on as she grows up - using any early photographs and memories you have of her as an infant, and moving on to include significant events, first day at nursery, holidays, special days etc. I don't know about your relationship with her birth parents, or the sort of contact she has with them - so many things to consider. Good luck with all of this, and thanks to you, and so many other grandparents, aunts, uncles, sisters, other family members who step forward to make sure a child remains within her birth family.