Granny is the reason her granddaughter is going into the woods and the one who made her the red cape the Baker and his wife need to lift the Witch’s spell.
She was then eaten by the Wolf, who broke into her house and put her clothes on to trick her granddaughter. The Wolf eventually eats her granddaughter, who she reunites with in the Wolf’s stomach. She is later saved by the Baker, who killed the Wolf. Thinking he was a hunter, when he left she went after him, wondering if he would help her granddaughter skin the wolf. Revealing himself to be a Baker she went into her house. She later made a new cape her granddaughter out of the Wolf’s skin and gave her a knife for protection.
Her granddaughter goes into the woods again, after her house was destroyed by the Giant to move in with Granny. Granny’s fate is unknown, since her granddaughter never makes in to her house.