My granddaughter is unable to create her own playlists as a member of my Family Apple Music subscription. Any help out there for that?

First, did your granddaughter follow the steps in the "Create a playlist" section of:

Create and share Apple Music playlists - Apple Support

Second, does she have her own unique Apple ID? (I assume you are not sharing an Apple ID with her.)

Finally, if something isn’t working right is to restart your iPhone. If necessary (device not responding), try a forced restart. Both methods can be found here:

Restart your iPhone - Apple Support