Grenades are one of the two main additions to equipment (aside from wands), in the Divinity Original Sin Enhanced Edition. Grenades are best described as "throwable elemental arrows", as they have almost identical effects to arrows available to the ranger class - with some notable exceptions.
Grenades are available from the very beginning of the game - during the encounter with the two drunken guards on the bridge, you will be able to acquire one of those (or get hit by it, if you're not quick enough and if you start a fight with them). The only major difference between grenades and elemental arrows is the fact, that you can't retrieve them (there's no talent for that) - they are gone as soon as you throw them.
Grenades are best used by a character that lacks any long-distance attacks, as well as refrains from using spells in combat. The ideal choice is either a warrior, a paladin, or a rogue, basically classes that are fighting in melee range - grenades will help them to affect enemies with crowd control effects, as well as allow them to reach an annoying foe, hidden behind a firewall, or a poison cloud.
Grenades can be found scattered around the world, often hidden in common places (like barrels, chests, boxes, desks, and so on). Additionally, enemies you fight during your journey can be carrying them as well - to acquire them from your foes, you have to defeat them before they are able to throw them (which often happens as soon as the fight starts). The last method is, of course, acquisition through crafting - details can be found in the "Crafting" section of this guide.
There's over a dozen of different grenades in the game, most of which deal a specific type of elemental damage, and almost every single one has an additional effect, such as stun, setting the target on fire, or even charm. Below you can find a table describing each and every grenade available in the game.
Chance to decrease the armor of the target
Chance to disease the target, decreasing the constitution and bodybuilding.
Creates a poison cloud, which can poison enemies, or explode when exposed to fire.
Chance to freeze the target
Creates a frozen surface
Chance to set Burning status
Chance to set Bleeding status
Chance to stun the target
Chance to terrify the target, causing him to flee from your character
Chance to knock the target down (Knockdown effect)
Chance to blind the target (Blinding effect)
Creates a smoke screen, which decreases the visibility of characters inside of it
Chance to charm the target, who will then fight on your side
Restores a certain amount of health points to your allies
Creates a poison surface
Creates an oil surface
Creates a water surface