Why is it in Simpe that if let's say I have a child and a grandparent, it says the child is the grandchild and the grandparent is the grandparent (like it should) but if I have the same child and an aunt, it appears in simpe that the neice/nephew is the aunt/uncle and vise versa? It's very confusing to me, is it supposed to be this way?

It's always been this way, I don't know why. I change them all myself. I don't think it affects anything in the actual game, though. It would be nice if it could be the right way around, I agree that it's very confusing.