It could be any number of things,, but there ARE significant clues in your post.....
Childhood daydreaming is normal,, daydreaming to the point that daily life or grades are effected,, is not. Its an indication of escape. Now, WHAT is the child escaping FROM? No idea. It could be that your mothers death effected her more than you know. Notice,, daily life and routine,, stayed as it was...
Then again, she could be just going thru a little rebel stage and in a few weeks she'll snap out of it and return to wanting to do well in school.
Best advise is ask her what she daydreams about,, that in itself could tell you a lot.