When we were driving to and from UT for Christmas we had a lot of time to talk to Bella. She was asking us all about our lives prior to her.
We got into a discussion about grandparents and so we explained to her (as we have previously, but not in so much detail), that my mom is her grandma, my dad (who's in heaven) is her grandpa, and so on and so forth. Then she couldn't figure out how Grandma Kim and Grandpa Dan (our next door neighbors) are her grandparents. So we explained that we aren't really related, but we just call them Grandma and Grandpa because they mean a lot to us and we don't have any near by. She then went to my mom's house and proceeded to tell her, "you are my mom's mom and that means your my Grandpa. Mommy's dad and Daddy's mom are in Heaven but they are my Grandpa and Grandma, but Grandma and Grandpa Kim are my pretend Grandma."
She also asked us how we met. We told her we met at a work meeting. She thought about it for a minute and then said, "Then you hugged and kissed and got married?" Yep, something like that.