Looks like exactly what it was: art school juvenilia by an artist overflowing with ideas and still accruing experience (and funding). But it was already remarkable how good Lynch was at creating a nightmare world with limited resources, and how fresh it felt to combine that nightmare world with traditional Americana. The story of a search for familial love—and the loss of it.
The desire for human connection, when the reality of everyday life is reduced to a cacophony of physical and verbal abuse. The tragedy when your parents are absurd clowns, who rob their son his right to a decent life. The grandmother is a symbol for affection and warmth, and Lynch mixes that with ghostly faces and pitch black rooms. Ultimately, getting love and then losing that makes life a very surreal experience.
The feeling of urine pooling between your legs, warming and shameful. Feels like Lynch straight-up ripped the film out from a little boy's psyche. I wish he'd done something else with these sickly, radiated colours. This is a gem though, so brutal and tender-hearted. The animations are about as direct a representation of psychosexual neuroses that I can imagine. And, expectedly, the sound design is remarkable.
You can watch it here http://bit.ly/aE47eC. Though this has a third of Eraserhead's length and kind of the same feel/ideas, Grandmother has the same amount of story in it and it is way more creepier. Lynch's fisrst little masterpiece.