Your SIL was just intimidated and made herself feel better by the things she said. I'm sorry you had that uncomfortable experience.

Most of the time, people react positively to my DD, but sometimes I can see parents of same age children cringe and people do ask her age and raise eyebrows.

I get so annoyed when people assume I sit around drilling things into my DD. Truth be told, we goof off most of the time, but yes, I do speak to her like she is an intelligent human being who deserves a reasonable answer and she is very curious. I was so offended when I took her to her first day of preschool and they spoke to her in a slow simple way that seemed downright silly to me. She must have wondered why they were asking such stupid questions like, "What color is that pumpkin you are coloring?"