A grenade is a weapon consisting of an explosive device contained within a solid metal shell, usually thrown by hand or launched from a rifle or purpose-built grenade launcher. In the real world, grenades come in many varieties, including fragmentation, incendiary, smoke (in many colors), gas (incapacitating or lethal), concussion, stun ("flash-bang"), and even more. Grenades are not widely used as anti-tank weapons, as modern tank armor has gotten too tough for such devices.
In Wasteland, there's only one type of grenade - fragmentation. Grenades are used for combat, and cannot be used for blasting. Just like with TNT or Plastic explosives, if a character uses a grenade in combat, another grenade in the character's inventory (if available) will replace the grenade on the next round, allowing the character to continuously throw grenades without having to switch weapons in the middle of a firefight, like when using LAW rockets or RPG-7s. Grenades are more powerful combat explosives than chunks of TNT, but less powerful than Plastic explosives.