Bathilda is a very old witch and the former neighbor of the Dumbledore family in Godric's Hollow. As such, she knows quite a bit about the family's past, including the darker and more tragic parts. As the great aunt of Gellert Grindelwald, it was actually Bathilda who introduced Dumbledore to the future Dark wizard. After Dumbledore's death, the conniving Rita Skeeter pays Bathilda a visit, sneaks her some Veritaserum. Rita thus has no trouble pulling all sorts of damning information out of Bathilda, which later appears in The Life and Lies of Albus Dumbledore.
Later in the novel, Bathilda is used one again, poor lady. This time, Voldemort's snake, Nagini, inhabits her corpse and attacks Harry and Hermione when they visit Godric's Hollow.