Yes, I think maybe 'baby' has died, and photo was taken on what would have been 'baby's birthday.
Thus youngest child (Glyn) must be at least 21 months old in the picture, probably more, depending on the gap between Glyn and baby, which makes more sense.
I think the words were written ( and presumably the picture sent) in August 1919. Someone (presumably Mummie) wanted to enclose a message from the children when writing to Daddie, and instead of using any old bit of paper, she found this old photo and used that.
After writing the message she added . :
(Photo) taken on Baby's birthday March 4th 1918
(Photo) one year and 5 months old