Grips are how you connect to your opponent. In the gi, you can grip the collar, sleeve, lapel, pants, and belt — each grip enables different attacks and controls. In no-gi you work with wrist control, underhooks, overhooks, and body clinches.
Good grips give you leverage and information. Bad or over-committed grips tire your hands and let the opponent control your movements. A key principle at every level is to break your opponent's posture before attacking: you usually need to control their sleeve and collar (gi) or their wrist and head (no-gi) to stop them from simply sitting back.
Grip fighting — establishing your preferred grips while denying theirs — is a distinct skill set that becomes more important as opponents improve. Even beginners benefit from learning not to grab randomly: a deliberate sleeve-and-collar grip in closed guard is the foundation of most guard attacks.