Why is the hand grenade needed?

Answer 1

Long Answer:

Hand grenades give light infantry and effective and simple way of delivering a concentrated charge of explosives over short ranges. The small size and relatively light weight of a hand grenade such as the M67 Fragmentation Grenade used by the US Army and Marine Corps makes it highly portable, and its considerable lethal radius makes it useful for clearing rooms or bunkers in MOUT (Military Operations in Urban Terrain)/ urban warfare operations, indirect tactical fire needs by lobbing it over walls and other obstacles, for engaging groups of enemy soldiers in more open terrain, and for damaging or destroying thin-skinned or lightly protected vehicles and targets.

Short Answer:

Basically, a grenade lets a light-armed soldier pack explosive firepower and use it to clear rooms/bunkers/trenches, and attack nearby targets behind cover by throwing it over whatever the enemy is hiding behind. It can also be used to attack trucks, jeeps, etc.

Urban warfare is one case where the grenade is especially useful.