The Grotto is a place where more seasoned adventurers tend to mess about with swords and sorcery. It's absolutely infested with all sorts of nasty nasties which seem a fair bit tougher than the average dungeon monster.
The Grotto is the hardest of the completely random dungeons in the game. The boss and monster populations are randomly generated, and everything has vastly increased combat strength. Grimm's Grotto is the closest dungeon equivalent to ranked mode from the alpha. Since it only has a single boss that is chosen randomly, its difficulty is going to be very random.
Monster difficulty is 140%.
Grimm's Grotto uses a different monster placement algorithm than other dungeons. While most dungeons will weight the placement of low-level monsters towards the player's start location and high-level monsters away from it, Grimm's Grotto places them randomly. This means it has a significantly higher probability of creating unwinnable layouts than any other dungeon. According to the developers, this is an intentional throwback to the alpha.
Due to the randomized boss, it is difficult to approach Grimm's Grotto with an overly-specialized strategy. Instead, it is better to prepare yourself to deal with a wide variety of different bosses. Your most important goal is to find ways to navigate around monsters that are blocking your path to avoid getting cut off. The ENDISWAL, WEYTWUT and PISORF glyphs all work very well for this purpose. There are also some preparations that can increase your chances against being stuck between monsters that are too powerful: the Bear Mace or the Slaying Wand from the Blacksmith; the Transmutation Seal from the Alchemist; or arguably the best one, the Titan Guitar in case you have it lockered or available via your backpack. Alternatively, you may prepare Jehora Jeheyu or Binlor Ironshield for their free glyphs, though consider that especially Jehora's preparation penalty can be significant.