I think it's appalling that she had her child on her lap and still didn't give you the seat. If there was a real problem with the child needing her own seat, I think the polite thing to do would be to say "I'm so sorry but my child needs this seat because..." such and such reason, etc. It is absolutely not ok not to give a reason when a heavily pregnant woman is standing up, she would've known it looked really rude, so it's just common courtesy to explain.
Having said that, my children will always be taught to stand for others in need, I think it promotes a terrible image to see your parent ignore someone in need like that, and it just means more people will grow up without manners, which is desperately sad.
I don't care how many women have great comfortable pregnancies and don't 'feel' anyone should stand for them, this is about manners, and the offer should always be given to anyone who could conceivably be struggling: pregnant, disabled, elderly etc. I myself have suffered terribly during my pregnancy, and after a 9 hour shift standing up, standing on the train feels like standing on knives to me. Not just that but I get hot and sick on the train, the rocking is a nightmare when standing, and more than once I've had to pull out a plastic bag, it's hell. I travel at rush hour morning and evening, and 9 times out of 10 no one will offer me their seat.
I have found actually that more women than men have offered me a seat. The worst culprit (on my journeys anyway) is a man in his 50s-60s, which seems weird. So often when I get on a train people close their eyes and pretend they're asleep, it's disgraceful. I once saw a row of 5 men sitting in priority seats, all with wedding rings on, and to be honest all I could think was "thank f*** I'm not married to them". So far I have never asked anyone for a seat because I find it too awkward, but I'm always very grateful and kind to anyone nice enough to offer (whether I take it or not). Once I was in so much pain I sat on the train floor, people clearly saw me but still didn't offer a seat. You know that in a lot of European countries it's illegal not to give your seat to a pregnant woman, and in all honesty, it makes me want to leave the UK. Manners used to be so important, now it's a rarity, makes me so sad.