Oxygen is generally used in palliative patients as comfort only. We aren't treating the numbers (O2 sat) anymore. If they appear to be short of breath and the oxygen seems to help calm them down, then it is used. Sometimes it agitates patients to have the nasal prongs in the nose, so it might be taken off. It's hard to know why they did it in your grandma's case.
There is so much that can be done in the home to allow a patient to die at home. Generally in palliative care, IVs are not used but subcutaneous injections are used. A subcutaneous line is put in either the abdomen, upper arm, or upper thigh so that they are not getting poked with a needle each time. Usually pain medications are pushed through as needed, at regular intervals, or as a continuous infusion. This can be done in the home, as well as having oxygen set up on the home.