It hinders an enlargement, and it limits the amount of recorded information and detail. Some describe graininess as noise and akin it to the limits of audio or video tape. Graininess, sharpness, and resolution are thought to be the three image characteristics defining film. They are independent yet related. Achieving the best in one might lessen another.
Grain is the developed silver salt.
The larger the grain, the more sensitive the film is to light. Therefore, faster speed films have larger grains. Some people like the gritty effect grain size can give. In a scientific application, grain can hinder the interpretation of the image, yielding unusable results. Today's newer films have decreased grain size while still keeping the higher sensitivities to light.