She also saw Gavinia looking admiringly at her man, and in that doleful moment she thought she understood all.

It was Corp who had done it, and Tommy had been the looker-on.

He had sought to keep the incident secret because, though he was in it, the glory had been won by another (oh, how base!), and now, profiting by the boy's mistake, he was swaggering in that other's clothes (oh, baser still!).
Everything was revealed to her in a flash, and she stooped over the baby to hide a sudden tear.

She did not want to hear any more.
The baby cried.

Babies are aware that they can't do very much; but all of them who knew Grizel were almost contemptuously confident of their power over her, and when this one saw (they are very sharp) that in his presence she could actually think of something else, he was so hurt that he cried.
Was she to be blamed for thinking so meanly of Tommy?
You can blame her with that tear in her eye if you choose; but I can think only of the gladness that came afterwards when she knew she had been unjust to him.