Granny's Backstory

The reason to why Granny is what she is today is deeply tied with her past family trauma. After Granny found out her daughter poisoned her beloved grand daughter and son in law, she became mentally ill and crazy. After killing Angeline for poisoning her family, she became mentally insane. Granny also seems deeply tied with Slenderina's teddy bear, which is the last thing she has of Slendrina. If the player holds the teddy bear, Granny instantly knows their location and her eyes start to glow red.

Other Lore:

If you've beaten Granny, you've probably seen the "The End" scene, where Granny instantly teleports to the player in the end. And also, in the end scene for the player escaping the from the Spider Cellar, Granny can be seen peeking out from a crouch-hole. All this shows us evidence that Granny can actually kill you instantly whenever she wants. She can go under crouch-holes to get you. She can instantly just teleport to you and kill you. But why does she not instantly? Fans believe that she's really just testing you, playing round. She follows her own rules. She really wants to see you can actually escape. 

Un-explainable lore:

We still don't have and official answer to how Granny is still alive. Some fans say that Slendrina cast an immortality spell, but it accidentally turned into a curse, and Granny's soul was stuck in her decaying body. But we do not have an official answer.