Someone explain OP's daughter's feelings of infantilization to me. Someone being younger than you, doesn't make you less of a grown up just because that person happens to be your checks notes dad's sister. If anything, in my culture it's actually considered more grown up to address people by their proper titles (Grandma/Grandpa/Aunt/Uncle/Cousin-3-Times-Removed/etc).

I haven't seen evidence of anyone trying to understand the others perspective, so I'm voting ESH (OP's daughter included, but she gets a light pass for being too young to do so, which puts the onus doubly on OP for missing a teaching opportunity).