It's a tough one, and i do sympathise with you.
Take a deep breath and think -
the concept of motherhood is brand new to you, and the concept of grandmotherhood is very new to your mum-inlaw too, so everyone is adjusting to the new situation, and the new little person that everyone wants the best for.
As an experienced mum, your m-i-l will be trying to help. I know that it almost always fels like interfering, butbelieve me, that is her motive, she maybe just has trouble being tactful and stepping back so you can 'have a go' at things for yourself.
Speaking as a gradndad, my wife and I have been really careful to avoid 'butting in' but it is hard! Your m-i-l will get better as she adjusts to the situation, promise!
the advice that you smile and nod and do what you think is best is spot on - this is your baby, to be raised as you and your husband see fit. Your m-i-lmay have issues - but she will be advised to keep them to herself!
This initial 'novelty' period doesn't last long, then everyone settles down to life, and you get to carry on being mum, with a little help (and that is what is offered, honestly!) and support when you need it.
Enjoy your new baby!