My grandmother was layed off from her job because they got rid of the position. But then they filled the same position with someone else is it legal?

If the new person who replaced your grandmother is several years younger and is doing all or most of the duties that she had been performing, then there is a good chance that the employer discriminated against her based on age. You should meet with an employment law attorney who can review the facts and give you a better idea of how strong her case is.