"This one’s a multicultural potpourri. Nearly all the frag grenades on Rook Island are American-made surplus items abandoned by the British after the Falklands War. They were stolen by Argentinean forces and then sold to South American pirates after the British victory. The pirates then relocated to Rook Island where they were killed by Vaas’ men when an arms deal went bad. Now that's what Arizona likes to call immigration reform!"
It is a powerful anti personnel & vehicle explosive that works on a set time fuse. It can destroy anything, including vehicles with or without machine guns and — of course — any kind of infantry, including Heavies.
You can also use it against animals, although some will easily evade its effects.
"Also known as the Island of Spice, this beautiful Caribbean Island is a global destination for tourists looking to sample her ecotourism and beautiful beaches, and nightlife filled with beautiful calypso and reggae music. That’s Grenada the country. Grenades, on the other hand, explode. You fucking throw them and say something dumb like “Grenade Out!” And then they blow up."
— Data Console
The Grenade is also an explosive in Far Cry 3: Blood Dragon. Unlike its Far Cry 3 variant, the grenade in Blood Dragon emits a rapid beeping noise rather than a clicking sound for its timer, indicating its presence MUCH better when in the vicinity. Other than the change of the sound file, it's nearly identical in damage and use to the "regular" version.
The Grenade in Far Cry 3 and in Far Cry 4 appears to be the M26, used in the past by the US & Canadian military but it has been replaced by the M67. Which is why large numbers of surplus grenades ended up on the black market and in the hands of Jason and Vaas' pirates, and then manufactured/bought by Pagan Min's forces.