Don't underestimate what a big deal this will be in his life!!! He's going to need lots of reassurance, love and a listening ear and shoulder to cry on!
I would give him all the facts about where Grandpa will live now and how it will affect his relationship with the family. The details of the divorce are not appropriate of course, but a general statement of why Grandma and Grandpa are no longer married would be helpful. Grandpa did some things to hurt Grandma, or Grandpa and Grandma could not get along anymore and they don't want to be fighting all the time... Ask him if he has any questions and be willing to answer whatever he asks. If his behavior changes it would be good to take him to a counselor who works with kids. Don't assume he'll pull through, do whatever it takes to deal with his feelings.
I don't know what happened with you and your son's dad, but he might be worried that no home is stable and who else is going to leave him... Be aware that this is a normal connection of events and needs to be dealt with. His relationship with his dad is what he'll assume his relationship with his Grandpa will be, quite likely.
Best wishes, I know this is tough on everyone, and probably you as well. Don't stuff your feelings just to be strong for your son, find someone you can talk to as well so you can deal with the fall out of this situation.