I think it's good and fine if young people want to have fun with music and don't have any serious goals, but sometimes they imagine that they are better than they really are. Then, when they notice there is someone else with a more developed talent, it is disappointing to them. Not necessarily because they are jealous, but because they see what could have been possible for them. They will have wished that they'd had more discipline and better training.
It's tough, because if you push too hard as a parent, they may end up resenting it; but, if you don't push, they may end up resenting that.
I have a son who asked for a violin when he was six. At first, I did what my parents did - followed a hands-off approach and let him play what he wanted, when he wanted. Later, I decided that since he had an interest and a decent level of talent, it was my job as a parent to push him, so I pushed. Not in a crazy, homeschooled, 5-hours-a-day kind of way...I mean that I made him practice everyday for 30 minutes. And I made him practice what he was supposed to practice. Well, after a while, he started to really complain and whine about it. I was tired of the battles, so I said fine. I stopped making him practice and gave him a break for about 2 months (I needed a break, too

). He had missed playing and started to practice on his own again. He likes fiddle tunes. I didn't push - just let him make music. I was trying to figure out what to do in the long run. Then, he started talking to me about everything he wanted to do with the violin - he had some pretty lofty goals. I told him that if he wanted those things, it was going to take a lot of work. He would have to do what his teacher asked of him and practice everyday. He agreed, so we're back at it. Weekly lessons and practice every morning at 6:30. His new teacher lets him choose his pieces, so I'm hoping that we'll have a better balance of discipline and enjoyment this time around.
So, I guess what I'm saying is that it depends on what the child's interests and goals are. If it's something your niece wants to become accomplished at, I think that her parents will need to take some initiative to help her acheive her goals. But, so many kids' parents make them take lessons, and then they never touch a piano in adulthood. Those kids shouldn't be pushed to learn beyond the basics. As a parent, my idea is to expose my children to lots of things, see which ones capture their passionate interest, and then help them to develop it. Harder to do in practice than in theory, but I think it's a good theory anyway.