Would I be correct in assuming that your grandmother came from a Mediterranean background, i.e. Spanish, Italian, Portuguese, etc.? I come from an Italian family and I can tell you that there’s a lot of physically demonstrative devotion like this. In fact, in Italy they often touch or kiss the statues in addition to lighting candles, and it’s not just the old people who do it - when my younger cousin was visiting this summer, I took her to my church which has a Pieta` statue, and when she prayed in front of it, she crossed herself, kissed the fingertips of her right hand and then touched the wound in Christ’s foot. I think the Mediterraneans have a very sweet, childlike way of expressing faith that a lot of other people misunderstand (then again, I’m biased).
As for the candles, I don’t know the exact origin but you’re probably right in guessing that it has to do with all the symbolic associations of light. Unlike most of our churches here, especially the modern ones, the churches in Italy always have lots of candles. I guess you could look at it as a form of prayer or perhaps an enhancement to a prayer said in front of the statue.