I mean, but it sounds like they pretty respectfully said that she didn’t follow their bedtime requests (which are super important for getting sleep routines established), and instead of apologizing, Gma deflected and got defensive by saying that’s how she raised her kids.

If OP and wife had come in all fire and brimstone over one incident, I’d totally lean towards AH for them, but they didn’t. They said what they didn’t like, got the push back, and reiterated their boundaries (reminding Gma that they were the parents, not her).

In that case, I’d say NAH. Gma insisting she’s hurt or upset about it and not apologizing kinda makes her the AH here.