Do we need to say anything after Thanks ?

What's the point of 'Welcome'

I was recently teaching my 2 year old toddler about saying thanks to small things. Like when she receives a gift from her Grand Mother.

The purpose of thanks I tell her is to be grateful and show it to the person that you are grateful. Now gratefulness is a kind gesture and makes the person feel better.
But then what about when some one says thanks to us. Should we say something like ‘No thanks’ or ‘No Mention’ or ‘Welcome’ ? It was more a logical question to me than a grammatical one.

If we think of it, Granny has already done her part of being kind, by giving the gift. She then received the Thank you. Does she need to be further kind by saying the ‘No Mention’ or it can end here ?
Where does it need to end otherwise ?
Does kindness need to be a competition of who is kinder or the kindest ?
Or it is actually arrogant to not say anything in response to a Thank you ? Its definitely not arrogant because if it was, there would have been no need for a thanks ?

Humans some time puzzle me.