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Here are a lot of really great article: https://www.agingcare.com/alzheimers-dementia
You might even hear Grandmother say she wants to "go home". When she says that, she means her "childhood home" back when everything was simple and fun as a child.
Years ago my aunt experienced similar paranoia, completely out of character, and immediately after she was placed in a nursing home by her husband's nephew. She did not have dementia and to the best of my knowledge her primary condition was mobility based.
She later found out that after admission, she had been given a psychotropic, I believe Haldol.
It was an unfortunate and miserable experience for her, arising from the fact that her husband had died, his nephew took over and against her will placed her in a facility, a mediocre one at best. I would have been depressed if I had been in that dump.
This is an amateur's view of one way to look at it. Your grandmother's brain has suffered, in medical terms, "a massive* insult." Imagine if you accidentally spilled even a tiny bit of water into your computer: sparks would fly, software would crash, your computer would be "acting weird."
Your grandmother's brain has effectively had its wiring smashed up. All your grandmother knows of this is that she is feeling terrified. She does not know why she is feeling like that. Subconsciously, she looks around her for possible threats. There aren't any real threats, but *something* must be making her so afraid, so her brain hits on the likeliest source (people) and the nearest ones (your devoted aunt and uncle).
In other words, her mind is trying to make sense of her emotions. But the emotions come from internal injury, not from external reality; so there is no real sense to be made of them; so it makes it up.
One thing you can definitely do to help is reassure your aunt and uncle that the family understands that your grandmother isn't making any sense, and thank them for taking such lovely care of her. You can also get busy online researching local services; so that when your aunt takes advice from your grandmother's doctor - which she must do, because your grandmother is deteriorating - you'll know what support is available when it comes to planning her care.
You should also all watch Teepa Snow, whose video tutorials are excellent.
*note: massive in this context means caused by a mass (as opposed to infection, toxin, trauma, e.g.) rather than really big. But even most doctors nowadays don't make that distinction.