Good question! I think there are a number of possibilities. Grandma Dowdel commands respect. She also intrigues people. When the body is laid out in the front room, people can't help but be curious and want to investigate. The reporter's presence lends some credibility to Grandma's story. Townsfolk like Mrs. L.J. Weidenbach, the banker’s wife, are also interested in being part of the action; they want to have some connection to the famous war hero. Mrs. Wilcox probably needs to sit with the body through the night so that she has another gossipy story to add to her repertoire. It’s likely that different townsfolk have different reasons for playing along with the story.