But basically instead of just "Oh, we're just saying some prayers for your dead granny..." -- which I think everyone would be fine with, it's the Mormons saying, "Oh, we're saying some prayers for your dead granny... because without true Mormon salvation she'd be burning in hell forever."
The Mormons also have "stand-ins" that they baptize in place of the person. Usually kids. So a kid goes up and says, "I'm so-and-so, grandmother of such-and-such..." and then they get dunked in a tub. And it also serves to further indoctrinate the kids... who are re-baptized a bunch of times.
My view... all religions are nutty. Not sure where we draw a line on any of them. But I don't really care what people do in the privacy of their own temple, or what internet archives they want to spend their time transcribing. If it lets them sleep a bit better knowing my dead great grandmother is with her family in Heaven... that's great. Or at least, it's no going to hurt her any. (=
As you note, many take a rather dim view of the practice (and it is very much not coming from a good place).