Rod, I've never researched whether there is any peculiar legal issue underlying the "[fill in the relative]-in-law" designation, but I've always thought that the in-law designation served to distinguish one's relatives by marriage from one's relatives by birth just as a matter of normal social interaction. You biological parents are your parents-in-fact, while your parents by marriage are your parents-in-law.

The same distinction is usually unstated but legally important regarding attorneys-at-law and attorneys-in-fact. A lay person who is specifically granted the power of attorney by his principal is an attorney-in-fact, while one with the authority to represent and act for another by operation of law is an attorney-at-law.