Question: I'm a little confused about Greta's death. Was it from eating too much or from her eating what was not good for her?
Answer: In the VHS version, Freddy cut open her stomach and was feeding her own intestines. That's why when he cut open the doll on the high chair tray Greta was wincing and squirming as Freddy had just cut her stomach open. I guess you could say that that doll on the high chair tray was like a voodoo doll of Greta so whatever Freddy did to it happened to Greta too. Eventually, Freddy caused Greta to choke on her own intestines which caused her to choke to death in the real world.
Answer: Her death was from Freddy overfeeding her while in the real world she choked to death.