Grandpa Flynn was the father of Kevin Flynn and grandfather to Sam Flynn. After Kevin's disappearance, he and his wife became Sam's caregivers. He died when Sam was 12.
Sam names his grandfather as "Mac".
Dialog in TRON: Betrayal suggests that the grandparents caring for Sam were Jordan's parents, not Kevin's (he refers to Jordan as "my daughter" while talking to Kevin), but they were credited in Legacy as Grandma and Grandpa Flynn.