Quran 4:23 Prohibited to you [for marriage] are your mothers,
your daughters, your sisters, your father's sisters, your mother's
sisters, your brother's daughters, your sister's daughters, your
[milk] mothers who nursed you, your sisters through nursing, your
wives' mothers, and your step-daughters under your guardianship [born]
of your wives unto whom you have gone in. But if you have not gone in
unto them, there is no sin upon you. And [also prohibited are] the
wives of your sons who are from your [own] loins, and that you take
[in marriage] two sisters simultaneously, except for what has already
occurred. Indeed, Allah is ever Forgiving and Merciful.
The "daughters" here means any descendant of a sister.
From Tafsir Al-Qurtubi:
وبنت الأخ ٱسم لكل أُنثى لأخيك عليها ولادة بواسطة أو مباشرة؛ وكذلك بنت
banatu alakhi (brother's daughters) is the name for every female of whom your brother is an ancestor, and the same is for banatu alokhti
From Ahkamul Quran by Abu Bakr Al-Jassas
وبناتكم قد يتناول بنات الأولاد وإن سفلن لأن الاسم يتناولهن كما يتناول
اسم الآباء الأجداد
"Daughters" includes grand-daughters, no matter how much lower they are
in the line of descent, that is because the name includes them just as
"fathers" includes all ascendants.
وقد عقل من قوله تعالى : وبنات الأخ وبنات الأخت من سفل منهن كما عقل من
قوله تعالى : أمهاتكم من علا منهن ومن قوله تعالى : وبناتكم من سفل منهن
From God's saying: "your brother's daughters and your sister's daughters
" it is understood that those women are also included who are lower in
the line of descent, just like "mothers" includes those women who are
above them. The same is applicable to "daughters" it includes
those who are lower than them.
This means that any grand-niece, at any level, is a mahram, and marriage is prohibited with them.