I am British and having some confusion with the use of garden and yard in this course.
Does this Danish sentence mean Granny may be sitting in a chair on the decking (as the English translation implies to me) or is she literally amongst the flowers?
I think have is the entire outside bit that comes with a house. The sentence doesn't make clear whether granny is sitting in a chair or planting flowers - it just says she is in the garden/backyard/whatever you call the outside bit that belongs to a house.
There is not much of a rule there, but usually you're pretty well off with using i. På is mostly used for anything værelse and for some public places: på torvet (in the square), på embeden (in the public office), på slottet (in the castle).