So when MIL said, "what do I need to buy, outside of what you're giving me," I guess that suggested she thought you were going to give her some food. That is a bit of odd phrasing, I think, but since it also included the offer to buy things, I think you were fine. It would be my assumption that the ILs were going to be providing all the food for the child, since they were "taking her on vacation."
Maybe she thought you would be sending her along with a half-finished bag of raisins, or something else that only your DD eats in your house, which would go to waste if DD wasn't there, and she was trying to tell you she wouldn't be insulted by that... ?
I'm not sure how old your daughter is, but is she young enough that they might have thought she would need special food, like toddler-sized cookie bites or something? Or are there any allergies etc. that they needed to account for--like gluten-free crackers for her, and regular crackers for them? Those are the only cases I can think of where it might be expected/preferable for parents to provide food to the hosts--medically-necessary, specialized, expensive foods that the hosts wouldn't be familiar with.