A. Very carefully, if at all -- even if you do know what you're talking about. For sure, a kid that young isn't likely to understand why he's being banished to his crib in the first place, or remember to change his behavior next time.
But did it occur to you that there may be a method to your sister-in-law's madness? She might be putting the baby in his crib to give herself a time-out, a healthy alternative if she's afraid she might lose it with her child.
You and your sister-in-law are two different people and two different kinds of moms. My BFF, who also happens to be my sister-in-law, is uncannily like me in many ways. But she's raising her kids as vegetarians; mine will eat most every part of a hog. And while neither of us believes in spanking, she's firmly in favor of taking away privileges for bad behavior, and I'm the yell-it-out-and-then-leave-it-alone kind of mom. Neither way is better than the other-they're just different, and we each do what works best for our family.
Bottom line: You need to give your sister-in-law the space to figure out what works for her and her baby in her home. You may not necessarily like it or agree with it, but that's your business -- just like how she disciplines her child is hers.