I like how Winnie put it - The truth without all the gory details. I do not have experience with the same scenario as you describe - just experience with young children and situations where the truth may not be so pretty. I have found that providing as much information as they can comprehend in response to their questions, done in a calm and loving manner, has been helpful.
I also think it is a good suggestion that if you are struggling with this or believe your grand daughter is, counseling may be a good idea.
It is so heartbreaking to see the effects addiction has on innocent kids. How fortunate your granddaughter is to have such a loving grandmom!
I hope this is the time for your daughter and that soon she is reunited with her daughter and choosing to stay in recovery. Hugs