Grading is the process of applying a colour treatment to footage. eg. putting a colour tone over everything, pulling out specific colours, making certain objects with bright colours duller so they don't draw as much attention to the eye, changing the colours of certain items. Grading happens during the post-production phase of a project. First, the creatives write a grading brief. Then the creatives and producer go to a studio to sit with the grade artist/colourist and touch up the colours in video footage. It's a very collaborative, conversational process that the Art Director is very involved with.
We are constantly expanding our vocab, so keep your eyes peeled for more.