Okay, kiddo. So you know how money is made of paper, right? Well, sometimes that paper money gets old and wrinkly, or dirty from being passed around a lot.
When people collect money, they want the prettiest, best-looking money they can find. That's where grading comes in.
Grading means that people look very closely at the money and decide how nice it looks on a scale from one to 70. A 70 is like the prettiest, newest money you've ever seen, while a one is very old and worn out.
The people who grade the money are experts who know all about what to look for. They check to see if the money is ripped, creased, stained, or has any weird marks on it. They also check to see how much the money has been used - the less, the better.
Once someone grades the money, they put it in a special plastic holder to keep it safe. And then the money is worth more or less depending on how nice it looks, just like how a toy might be worth more if it's in really good condition.
So, grading is all about deciding how pretty or valuable the money is, to people who collect it.