Mom has dementia and has been living in AL for 3 years. We now need to move her into Memory Care. How do we explain this to her?

You won't need to really "explain" it to someone who has memory issues. She won't remember it. So like others have suggested, just tell her a "therapeutic" fib that keeps her anxiety as low as possible.

I would say she is going to a new apt. Thats what we used to tell my Mom and that she will be making new friends. Keep it short since she can only process so much.

You don’t explain it using anything about her dementia. Make up a reason, her building is closing, the place is being renovated, etc. Make it about moving to a nice new place because her current one is becoming unavailable