My opinion? My opinion is that your MIL is a mean, nasty, spiteful old witch. And that she hates you so much that she set out to hurt you through your DD. (My DDs were treated much the same by MIL & FIL. Not only were they girls, but they were MY girls, and both looked like me and have very similar voices.)
Definitely, confront MIL. And when you do, be prepared to hear her say "But I did treat them equally! They all got toys!" or "I didn't have enough money to get expensive toys for ALL the kids!" And I agree with the others -- MIL treats your daughter badly, so MIL doesn't get to see her. You don't say how old DD is, but even the youngest children can understand "Grandma is mean to us, so she doesn't get to see us."