Is It Normal for My Toddler Grandbaby to Know More Sign Language Than She’s Able to Speak?

Actually yes, many parents and educaters are using sign to expand a toddlers ability to communicate while the toddler develops language skills. There are many benefits for toddlers who learn to sign.
Children are able to control the large muscles of their arms and hands far before the fine muscles of their mouths, throats, or tongues. Sign Language allows parents to open up a line of communication months before talking begins. Children are absolutely brilliant; to be a part of what they are thinking and feeling during the first two years of life is an incredible gift to both the child and the parent.

The benefits of signing with your young child are numerous. They include:
1. reduced frustration, temper tantrums, and miscommunications
2. early conversations
3. enhanced bonds built between parent and child
4. allows a means for communicating memories, worries, feelings, hurts, etc
5. enhanced speech and language development
6. increased vocabulary development

Here is some more info.
http://www.4hearingloss.com/archives/2005/11/sign_language_f_1.html