The difference between Niece and Step-
Niece is also noun with the meaning: a daughter of one's sibling, brother-in-law, or sister-in-law.
Step- is also prefix with the meaning: a prefix used before father, mother, brother, sister, son, daughter, child, and so forth, to indicate that the person being identified is not a blood relative but is related through the marriage of a parent.
check bellow for the other definitions of Niece and Step-
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Niece as a noun:
A daughter of one's sibling, brother-in-law, or sister-in-law; either the daughter of one's brother ("fraternal niece"), or of one's sister ("sororal niece").
Examples:
"My niece just celebrated her 15th birthday."