Grading of aggregates refers to its particle size distribution. It is determined by sieve analysis.
If we were to use aggregates of uniform particle size, the compacted mass will contain more voids. Therefore we always aim to have aggregates that comprise particles of various sizes. This will result in a mass with lesser voids.
The particle size distribution should ideally enable the smaller particles to fill the voids between the larger particles. The proper grading of aggregates will produce dense concrete. It will also need less quantity of fine aggregates and cement paste.
Therefore, it is important that the coarse and fine aggregates are well-graded to produce good quality concrete.