You don't mention your grandson's age, Gram2One, but I'm assuming he's quite young. Like others on this thread I don't think you should read too much into his choice of word/name for you.
When my youngest daughter was very little, she called all visitors to the house girls because the most frequent ones (her significantly older sisters) were called "the girls" by me. She just thought everyone who didn't live in the house was a "girl", including men, such as someone else's grandfather who came to a meeting at our house.
The grandfather in question did not mind in the least as he was a retired teacher who understood children.