For the last three weeks my grandmother has been sleeping a lot more than usual. I've taken into consideration that she has a bit of a cold, it's currently winter here in New Zealand and that she has started on a new medication which can make her a little drowsy. Is there any such thing as too much sleep? Some days she will stay awake from between 8am to 6pm on a good day and other days she might only be awake for 2 hours total.
More rest when one has a cold is a good thing.
My husband had many good days (as you describe them) interspersed with sleepy days when he needed more rest. I think that is often the nature of dementia.
How old is Grandmother? How long has she had dementia? Does she have other impairments?
I suggest asking her doctor to recommend a hospice evaluation, or arranging it yourself. If they conclude she is not ready for that kind of care yet, that is fine. You will have a contact when the time comes.