In my mind, after Pinkie discovered her party abilities, she went to live with her Grannie Pie in Ponyville, this scene is when her sisters are seeing her off the train and visiting Granny Pie. I imagine Granny Pie to be like an older version of Pinkie Pie, seeing as in this picture she used balloons instead of a walker or a cane. Granny Pie is only a little older than Granny Smith, she moved to Ponyville to start a bakery. She(in my headcannon) is the one who originally trained Mr. and Mrs. Cake. They both started to work for her when they were teenagers, and she taught them all she knew. When she later retired and moved to the local retirement home, she left Sugarcube Corner to Pinkie Pie, however, Pinkie was still young so she told Mr. and Mrs. Cake to take care of her shop until Pinkie was old enough.

I came up with Granny Pie’s colors after watching the Cutie Mark Cronicles and noticing that Pinkie is the only one on the farm with bright colors, and I decided that she would get her colors from her Granny Pie. Granny Pie is not dead, she is just retired, she currently lives in the retirement home.