grandchild / nephew / niece
nipoti
nee-POH-teh
Nipote is ambiguous: it means both grandchild (when said by a grandparent) and nephew/niece (when said by an aunt or uncle). Context is essential. The plural nipoti covers all these relationships.
Il nonno porta i nipoti al parco ogni sabato.
Grandpa takes the grandchildren to the park every Saturday.
Mia sorella ha appena avuto un bambino — sono diventato zio!
My sister just had a baby — I have become an uncle!