Final answer:
Senile psychosis characterizes the impaired contact with reality experienced by the grandmother.
Step-by-step explanation:
The situation described in the question can be characterized as Senile psychosis. Senile psychosis refers to a condition in which older adults experience impaired contact with reality, resulting in hallucinations, delusions, and disorientation. It is often associated with the aging process and can be caused by various factors, including Alzheimer's disease.