Can I vent - in-law issue

This!!! Thank you!

If you really want to solve the issue paigepea , you & dh will have to talk to them again. And you need to stop making the conversation a back and forth about party size... "We want a small party!" "We want a big party!" That is just taking positions. You will need to start asking open questions to truly understand what the real meaning of the party is to them & figure out how to find common ground. 

Like it or not, they are likely feeling disrespected. They could well see your dh's reaction as him 'forgetting where he came from.' When you have those kinds of broader conversations about the meaning of things, then you can come to solutions. 

I'll give two examples: When my brother & SIL understood WHY my mom wanted to invite X number of people they had never met, they were able to have a different conversation. They were then able to say, 'Ok... we trust you. We just ask that you respect the size of the venue - we aren't changing that, that you use discernment & good judgement to only choose those 'community elders' who would most matter to Nana, and that you contribute for those extra guests.'

Second example - and I've brought this example up before as a quintessential example about how often we as people aren't always arguing about what we think we're arguing about: My parents went away one summer. My bro was 18ish; I was 29ish. He drove my dad's truck a lot. That was fine. I was used to him driving the truck. But one day out of the blue he says,  

'Oh, I'm going over to Vancouver with my friend R to watch wrestling.'


Silly me says, 'Cool. How are you getting there?'

He's all like, "Well duh, I'm taking dad's truck."

To which I say, "Like hell you are. Nobody said anything to me about you being allowed to drive dad's truck on the ferry/on the mainland (we live on Vancouver Island).

We do about 15 minutes of back & forth shouting no you aren't / yes I am unproductive arguing.

Finally we somehow call time. I go to class the next day & we are talking about interest based conflict resolution. I'm finally able to calm the bleep down (we practiced this particular argument in class) and figure out how to talk to him about it.

Once we did that, we were able to get down to what really mattered. He didn't want to lose face. I was scared because if he got stuck, I'd be too far away to help him. And also that if something happened to the truck my parents would kill me, especially because I still didn't quite believe he had permission to drive it on the mainland. 

His godmother/our honorary aunt was willing to be in the position of 'If your parents get mad, I'll tell your parents I overruled you & let J. take the truck.' 

J took the cell phone & called me 2-3 times that day to check in. 

I let him make fun of me re: his friend... "Yeah, my crazy sister..." so it wasn't that he was a baby who couldn't go to Vancouver for the day on his own, it was his neurotic, control freak sister who was the issue. 

He got home safe & sound and I think it's the last time we've ever argued that intensely because we learned to stop & get beyond the surface of the argument to what the argument's really about. 

Talk to them again, paigepea . Ask them what this party means to them. What do they need? What are their hopes? Their fears? What is the deeper meaning of this event to them? What is it to you? Where do your core needs overlap & how do you work together to get those met?

Stop debating minutiae about numbers & names. 

ETA: as an aside, he actually DID ask my parents about taking the truck to the wrestling match prior to them leaving, & my mother apologized, because she forgot to tell me about it. It was just SO odd to me that they'd tell him, 'Sure, take the truck' and not mention it to me, & she totally understood why I thought he might be trying to pull one over on me.  

I am going to shock folks and generally agree.

That said, you are oversimplifying the problem. The ILs are clearly old school. They care about appearances. For them, this event isn't just for the OP's dd; it's a reflection of then and the family's standing in the wider community. On some level, the desire of the OP & her dh re: limiting the size of the party is an embarrassment to them. That is why they're cutting the folks the OP knows. It isn't to be passive aggressive. They're cutting the folks who understand the culture enough to cut them slack because they get these 'folks the OP doesn't even know' are the status conscious ones who will damage the family's reputation if they aren't given the invite they are 'owed' because these things are about social quid pro quo. These folks they are keeping are the ones to whom they see themselves as socially indebted to, or with whom they will lose face if they're snubbed.

Truly, as much as it pains me and you will hate heating it, I'd take a day or two and calm down. Then ask why xyz are the list. If it is that important to them, I'd have the bigger party - IF they financially contribute, including finding and paying for a larger venue should that be necessary to meet what they deem as the family's social responsibilities.

My parents had to do this for my brother's wedding. They knew I'd never marry, and he'd never have his kids christened, so his wedding was the last chance mom would have to balance any social debts our extended family had. She started 50ish over and then in discussing it with her sister got it down about 25 over - kept only the ones my late grandma would need there. The criteria was 'Would omitting this person cause our mother to roll over in her grave/haunt us forever.'

As hard as it is too understand, YOU have hurt them. They are in their own way trying to look out for your family's reputation and it hurts them that you don't seem to care. As far as they're concerned, it matters how this wider community views them, you, and your kids, and you not getting that and sharing that concern is both hurtful & offensive to them on sone level. In their minds they're shielding you from being the subject of gossip & you're being ungrateful.

I'm not saying it's right. I'm saying that's how it likely is.