The school has a duty of care over your grandson for the period of the day they look after him, irrespective of his circumstances. If a ‘special need’ is moderate the child may be accommodated in a conventional school, although that school will *always* have a dedicated special needs teacher (or helper, but there has to be someone who has specific responsibility for the special needs children).
It is up to the school to make the appropriate judgment on what level of support the child needs in the classroom environment and if necessary provide 1-1 support. Should they not be able to provide that, but nevertheless feel it is necessary, it is the schools duty to let your daughter know that and suggest alternatives (in the past, I have had children living with me that have meant I attended school with them occasionally).
That said, the ‘alternative’ is usually a dedicated special needs education facility, and *personally* speaking I would avoid that possibility like the plague. There is no inference there as to the dedication of the staff at such units, but in my experience they have a tough job keeping a measure of control over a classroom exclusively made up of SN children and rarely manage to actually educate them too.