Decades ago, having Grandma come to live with the younger generations was fairly common, and it often worked well. It did for my family. When my brother and I were teenagers and our little sister a toddler, our grandmother can to live with us. Grandma was crippled by rheumatoid arthritis and could no longer live alone.
My parents built a house that would accommodate the different generations, with some privacy for all, and Grandma came to live with us. The home wasn't huge by today's standards, but it was nice and well designed for our needs. The arrangement worked.
One big reason it worked was that Mom did not work outside the home, which was common in those days, so there was nearly always someone home with Grandma. Also, I was a born caregiver and filled the caregiver's shoes for both my toddler sister and my crippled grandma – with joy. Alas, I didn't know then that decades of my life would be spent as a caregiver, but that is another story.
These days, having grandma move in with the family is still an option for some families, but it has become more complicated. First of all, there are fewer families with a stay-at-home adult in the home. This is where a great deal depends on Grandma's health. I know of one family where the dad is single. He has custody of his two young sons most of the time, and his mother has moved in. For the most part, Grandma is actually a help with the boys. Yes, she has her issues, and there has been some adjusting on all sides. But with Dad's odd hours and Grandma still fairly capable, it's a situation that works well for all.
At least for now. But, what if Grandma's health began to fail? What if Grandma was in mid-stage Alzheimer's disease? Would this still work? It might. If the whole family is well prepared, the arrangement could still be fine. In this instance, the kids are getting used to having their grandmother live with them while she is still quite healthy. That should help with the transition, as they grow older and Grandma grows more frail. There will be some switching of roles, I expect, as time moves forward.
How you would prepare for an elder to move into your home would depend somewhat on the age of the children, if any are still living at home. Also, it would depend on the elder's health. Should the kids expect that Grandma is in charge when Mom and Dad aren't home, or should they be taught that they will be in the role of caregiver? There's a big difference and this needs to be discussed with the family ahead of time.
Often, as in the case above, there is a single adult child with children when the elder moves in. Sometimes, of course, there is a marriage to consider. All of these dynamics should be acknowledged and openly addressed, preferably giving examples of issues that could pop up and throw everyone off kilter.