Why is my stepdaughter making her children believe my children aren't related to hers through her father?

Her children call me by my first name and they ask politely if they can look after and play with my kids. When she comes over she always asks; how are the children doing? Never how are her sisters doing? In their home they have framed relatives hung on the walls, but none of me and my children. Her father said... show more Her children call me by my first name and they ask politely if they can look after and play with my kids.

When she comes over she always asks; how are the children doing? Never how are her sisters doing?

In their home they have framed relatives hung on the walls, but none of me and my children.

Her father said it would be best this way if his grandchildren didn't know that they are related to his second family.

I don't like this one bit and don't know how to handle this.
Update: A few days ago I got so tired of it, I let my kids know that they are related to my stepdaughter and her children. It did cause a problem and I'm sure my stepdaughter will correct her kids if the information gets back to them.
Update 2: Yes we have been married for 8 years, and have 2 children. My stepdaughter has 4 children and stated to her father after I had my first child that she didn't want her children knowing them as bio-relatives. She said to her father that it would keep the drama down in her life.
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