Grants are important for many reasons. First, grants provide much needed funding to organizations that are set up to do certain types of work. This means that the Federal Government does not need to create a new organization or agency to accomplish its objective. Second, since the grantee is not actually a part of the Federal Government, laws and policies that govern (and may restrict) governmental agencies do not apply. In other words, the grantee is considered autonomous, not an arm of the Federal Government. However, it is important to note that grantees are not typically entitled to the protections that Federal Government agencies may receive, either.
Grants, cooperative agreements, and contracts have a lot in common, but they also have distinct differences. Many things, including legal implications, are determined by how a federal agency sets up its agreement with a recipient of funds and what they call that relationship.