Physical & Emotional Abuse Support Group
Abuse is a general term for the treatment of someone that causes some kind of harm (to the abused person, to the abusers themselves, or to someone else) that is unlawful or wrongful. No one deserves abuse, period. Abuse can be emotional, physical, or sexual.
She is not alone in living this way, but needs to find other, more healthy outlets. If her spouse won't change, the relationship is doomed in my opinion.
She is probably putting all of her attention and energy into her daughters life to avoid thinking about her own life. What this will end up doing to her daughter is at the very least going to cause trust and boundary issues between them in the future.
There is a phenomenon called "emotional incest" in which a parent becomes grossly, emotionally over-involved in his/her childs life. It can cause emotional damage that could last throughout her childs life.
Try the book:
The Emotional Incest Syndrome
What to Do When a Parents Love Rules Your Life.
By Dr. Patricia Love
Perhaps in thinking ahead you should buy this book for your niece to read when this attention from her mother starts to affect her negatively.
I lived this sort of thing and I am speaking from experience.