Praise be to Allah.
If a man marries a woman and consummates the marriage with her, then her daughter – who is called his stepdaughter – becomes a mahram to him, and so do the daughter of her daughter and the daughter of her son, no matter how far the line of descent reaches.
Allah, may He be exalted, says explaining the women who are mahrams [and prohibited in marriage] for a man (interpretation of the meaning):
“…and your step-daughters under your guardianship [born] of your wives unto whom you have gone in…”
It says in Kashshaaf al-Qinaa‘ (5/72): The daughter of his stepson is prohibited for marriage according to the text, and the daughter of his stepdaughter is also prohibited, and this applies regardless of whether his wife is related to him (e.g., his cousin) or not, because they come under the heading of stepchildren. End quote.
It says in al-Insaaf (8/115): Note: The daughter of his wife’s son is prohibited to him for marriage. This was narrated by Saalih and others. Shaykh Taqiy ad-Deen (may Allah have mercy on him) stated that he did not know of any dispute concerning that. End quote.
Based on that, your husband is regarded as a mahram to your granddaughter, because she is included under the heading of stepdaughters.
A woman may uncover in front of her mahrams that which ordinarily appears of her, such as the head, face, hands, forearms and feet.
This is so long as there is no fear of fitnah or anything dubious. If a man feels any kind of temptation, it is haraam for him to look at her. If she has any doubts or concerns about the man, then it is haraam for the woman to uncover in front of him.
And Allah knows best.