Grade means "to evaluate or rank," like teachers who grade their students or a food inspector who grades a crop, determining whether it is "food-grade."
Grade can be both a noun and a verb. The verb form is used when you grade something, meaning you assign it a value. The actual mark assigned is the noun version of the word grade, such as an A or B. The noun grade can be used to indicate the rank or quality of other items as well, like professional-grade cookware. Grade can also describe the slope of a mountain or road, like a steep grade that is dangerous in bad weather.