The daughter of one's nephew or niece; your grandniece is two generations removed from you through your sibling's line.
From grand- (one generation further removed) plus niece (from Old French niece, from Latin neptis meaning granddaughter). This term became standardized alongside grandnephew in modern English.
Interestingly, we invented 'grandniece' and 'grandnephew' relatively recently compared to 'nephew' and 'niece'—for centuries, people just said 'my niece's daughter' because families were smaller and these relations mattered less in inheritance!
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