Yes, DNA can identify siblings. I know of one interesting case where DNA was used to identify siblings: A lot of Americans have been adopting Chinese baby girls from China. Two American families who got babies from China thought that their two babies were twin sisters. When they asked, they were told no, that the baby girls had been found abandoned in separate places a day apart. When they were settled in at home in the US, they had the little girls' DNA tested and found out that they were indeed twins.
You can currently buy a DNA test that will tell you if you're a grandparent of a child you swab for DNA. I'd conclude that you can DNA test for any relationship.