Seeing this just now lol
I also came here for answers, seems like they're still not cleared. Maybe Marlo's grandma was a mermaid from the older Barbie movies. It has happened that two separate stories linked, with Mermaid Tale 2 and Pearl Princess, so we can't rule out that option. And yeah it was also a little suspish how Isla went to find Barbie when there wasn't a single clue pointing that she might be the missing mermaid (bc she isn't a mermaid in the first place?) but once again it's just a movie so...