I've had a look at the Census records again from 1841 through to 1891 and found out that it was No 4 Ffolt Cottage that Margaret lived at. In the Census records Margaret's Grandparents had two daughters, May and her younger sister Anne. As there were no sons from the Grandparents marriage then I presume that Margaret was the illegitimate daughter of one of those two girls.
In fact three Grandchildren lived there with the Grandparents, Margaret Griffiths, Robert Thomas and Elizabeth Griffiths.
John, Margaret's Grandfather lived in Fforddlas Llansanffraid Glan Conwy in the 1841 Census. Also living there was John's father also called John and Ann his mother plus 4 sisters.