How old?

DH and I visited some friends in Dallas when we went through. Kelly (guy) and Lisa have a 3-year-old daughter named Gracie. She kept asking us all kinds of questions. One was "how old are you?" I responded five, as I figured, old is old... Her mom, Lisa, added "but she has a niece that is three years old." Gracie immediately looked at my knees in astonishment. Lisa quickly amended her statement - Miss JulieAnn's COUSIN is three years old. I just about died laughing.