It means what you feel it means. You already know, you're just trying to either rationalize against your gut instincts or doubting your own intuition.
By the way, death comes in many forms, not just the final kind. I've known many who are dead but still alive. I dreamt of my grandmother walking around her home as a spirit, ignoring my existence, and she began developing severe dementia soon after. She's still alive...if you call it living. She lived a long life with her mind in tact, over 80 years. People label aging minds with things like alzhemiers, but for the elderly, I've only seen it in people who gave up on life and prepared to die. That's my guess on what you are seeing. She may have many years ahead of her, but you may not have long with her for who she really is.