Maybe it's along the same line as any other "protective measure"? I mean, I know my children's carseats are great protection and in the event of a car crash, they would likely not be injured severely. But, those carseats don't offer 100% protection. I'm certainly not going to allow someone to drive my car with my kids in it who does not know how to drive a car simply because my kids are protected in their carseats. While carseats off a good deal of protection against something bad happening, they won't protect 100%, so I do need to remain vigilant. Likewise, even though my carseats are awesome, I know they aren't 100% effective...however, that doesn't mean that I'll just skip using them because "they don't work".
Just an analogy that might help.
Maybe the children are around immune compromised kids? Maybe her kids (or the parents) have a big thing coming up and they don't want to be sick (the holidays are coming up---what if they have plans they can't cancel or they don't want to risk exposing another child to an illness). Maybe they just don't want sick kids because being sick stinks. They know how vaccines work, and they know that in the general course of a day, the children are likely going to be protected, but avoiding known exposure is still a good idea for someone who does not want their children to get sick.
And I say that as someone who does not do the chicken pox vaccination (but who has an immune compromised child so I do vaccinate my other children for all but live vaccines per their pediatrician, on a delayed and selective schedule). So, I can see both sides of it...
As for how to handle it, I'd smile, nod, and then respect her wishes to not be exposed. I would imagine anyhow that if you are purposely attempting to get your kids an illness that you would also responsibly quarantine them anyhow, so it should totally be a non-issue. But yeah, obviously you and your other family members don't see eye to eye on it, so definately respect their non-exposure wishes. Otherwise, you'll just end up looking like an irresponsible individual who not only doesn't vaccinate but purposely exposes other people's children in the eyes of your family members who may be questioning your choices. So, don't vaccinate since that's your choice, but then respect your family member's wishes for keeping their children safe as well. :)