We are in a similar situation. It's easy for me to explain our desire to be plastic and junk toy free to my folks because they agree! They are into giving one nice thoughtful gift each holiday. This year they are giving DD a wooden barn because they know how much she loves her schleich farm animals. They also knew that we were looking at getting her one but couldn't afford it so they wanted to do it. Dh's family is harder. We were very specific last year about not wanting anything that required batteries and plastic junk. I listened as DH explained this to his mom. What did we get? Plastic junk that required batteries. He told them that we gave it away because we really meant what we said. I believe very strongly that you can't control what others give but you can control what stays in your own home! This year my MIL asked for a specific suggestion. DH told her an easel would be great. So she is getting her an easel. Yeah, now we can say that Grandma got you this easel. BUT I can gauruntee that they will also send a box of junk. They can't just give one thing for whatever reason. We will likely donate anything else because it a) doesn't fit in with what we want her to play with and b) we live in a very small house and just don't have the room.
It's hard. For us beyond parents we don't go into it but I do think that it's important for grandparents to at least try to see how their kids are trying to raise their own little ones and try to respect that.