Why?

My mom and her best friend and her friend's husband (who is also her friend, I guess!) are visiting right now. I am just wondering something. Let me preface it by saying I don't mind it or even think it is unusual, I just wonder why... Why do older people refer to themselves as "Grandpa ..." or "Grandma ..." to little children who are not their grandchildren? Night was calling them Max and Eileen then they told him to call them Grandpa Max and Grandma K (referring to her last name). I understand it is a term of endearment, but why should my son have that endearment to these people that he more than likely won't see again, definetly not within the next year or so? He just met them this week! Shouldn't that be earned? Isn't that what makes it endearing? What is it that compells people to do that?
Personally, I think that you should only refer to your own grandparents as grandparents, unless it is someone special. For instance, my host parents (from Australia) are not technically Night and Keira's grandparents, but they are very special to me and I think of them as my parents of sorts; therefore, it is okay (better than ok!) for him to call them his Granny and Pop. That one makes sense to me.
What do you think?