this aspect of death (skeletons , ghouls, ghosties etc) is not one I am comfortable with dwelling on, nor I hope do the DGCs make that connection with the smiling loving Grandpa they have lost.
I don't think they will necessarily link the two in their minds MawBroon
It depends on their age, of course, but I remember DGD2 (then 3) telling me in a very matter-of-fact way, when we passed her DGF's old house, that 'Grandad is in heaven with the cat'.
Ghosts, ghouls, skeletons seems to be a separate thing altogether in their minds when young as I think she, at least, just pictured her Grandad as he was when still alive.
I don't particularly like this ghoulishness myself and especially not the knives - and it is the commercialism that upsets me as much as anything (a sea of plastic).
Old stories, including such as Grimm's Fairy Tales, were always scary but much has been 'Disneyfied' for today's youngsters.