My initial reaction was "whoa, who is mom here?" Also, I'm not sure whose house you were in -- everyone seems to assume that it was your daughter's. However, I think in your house, if you don't want her to play the piano at a certain time, you do have the right to set the rules. In my house, we follow my rules. Someone else's house, it's their rules.
From a mom's perspective, as a grandparent, the best thing that you can do is to step back. Give advice when asked. Like it or not, you are in the back seat. I am sure that it is very difficult to hold your tongue sometimes. You have raised 8 children, (WOW!) you have lots of experience, and you have done so successfully. However, wisdom on how to do things does change over time, and how you might have handled something might simply not be the way that your daughter wants to do things. (SIDS and back sleeping would be the big one, for example.) For instance, in this circumstance, maybe your daughter wants the baby to be able to sleep through lots of noise so that the house does not need to be quiet, or so that she does not have to try to her daughter be quiet, while baby is napping.
From what you have described, there is some poor communication styles going on, looks like for everyone involved. As the grandparent, by demanding not to be "contradicted" on how your daughter is with her children, you have, quite frankly, made yourself very unwelcome.
That being said, and assuming that there isn't more to the story, I don't think your daughter handled this well. I would never cut my children off from their grandparents because of a disagreement such as this, because my kids need their grandparents, but I can understand some of the resentfulness. I think I would want to know if there was more, too, just in case there has been something building up from your daughter's perspective.
I have supportive in-laws who I can count on and do not criticize me constantly, or demand certain things from me or my kids. My husband's parents do not interfere. I do, on occassion, ask for their advice. I am relaxed with my kids around them. If I'm talking to them about something going on with one of the kids, my mother in law will tell me a story about something similar that she experienced with her kids, and how she handled it. She doesn't say, do this. She provides me with the information in a very mild way, and obviously leaves it up to me to decide what I want to do with it.
My parents, on the other hand, although I love them dearly, drive me crazy. They have an opinion about everything. (That is their personalities.) When to potty train, how to do it, why what I am doing is wrong, how I am stupid for doing research on the internet or using books and talking to my doctor and other parents and blah blah blah. My mom says, why don't you ask me? They cancel babysitting engagements with me, they are not available in emergencies.
There is a huge difference in being told how to do something and offering information. And it's not even that I think that my mom doens't know things. I do think she knows things. But guess who sees the kids more? Guess who I go to when I do have questions? I've also noticed that my aunt behaves like my in-laws with her son and grandchild -- can I do something to help? Would you like me to do something? And backs off if the answer is "no." I was wishing for more of that. : )
Now, where to go from here? I don't know. I would suggest not using email to communicate for anything other than mundane things again, it is so difficult to know for sure that what you want to say comes across the way you intended to the other person, and it is so easy to be more negative in the message then you intended or would have done in person. Do apologize. Tell her you only say things because you care, tell her that she has beautiful kids and that you think she is doing a wonderful job. (When was the last time that you told her that? When someone tells me something like that, it always give me pause -- I just don't hear it, ever, and of course, it takes years and years and years to really be able to tell if you did a good job.) Tell her that you have a wealth of experience, and that you just wanted to help, but will only do so in the future if she asks. If she can't accept an apology, then shame on her.
And for all you daughters out there that have my parents -- here is what you do. You do as I have suggested to N. H. You hold your tongue, as difficult as that may be. You nod. You say, thank you for sharing that with me. You ask a question here and there. You tell them at a later time that something that they suggested worked, or didn't work. And you continue to do what you want to do. : ) Or, actually try something that was suggested, since they might actually know something. And if asked why you aren't doing something they suggested, say you tried it, or you considered it along with many other things, and now you are trying this. Hurt feelings and arguments spared. All grandparents are seeking is to feel involved with you and your kids and to be respected for what they did in raising you. They love you. They love your kids. And I would, if you can't get a grandparent to back off, say very firmly that you understand that they have a lot of information to share, but at this point, you are doing "X", and when you want to know something different, you will absolutely ask. And then, if that does't help...maybe visits decrease a bit with the interfering grandma.
This is such a classic dilemna -- grandmas, do you remember feeling this way about your mother or mother in law?