Second Life's world is made up of a grid of servers that run sims. The world itself is often referred to as "the grid".
There are currently two grids available for public use, Agni is referred to as the "Main Grid, and Aditi, the Preview Grid for public beta testing. A special beta Grid, Uma, is available for testing development versions of the open source Second Life Client by external developers. There are possibly other grids for Linden Lab use as well. Teen SL is often thought to be on a separate grid as well, but in fact it exists on Agni.
The origin of use of "grid" could come from the fact that sims are arranged in a grid-like matrix pattern or it could come from the real-life use of "grid" to refer to a collection of networked servers (which Second Life is).
The edit window's edit pane has a Use Grid option.