Diabetes can be slow or rapidly developing, even in children. I do not think there is any other cause than diabetes at this point.
Would suggest the parents look into low carb eating for the child to avoid the highs, along with plenty of protein and healthy fats to keep blood sugars stable.
Please have them look up Bernstein Diabetes University, and children, on Utube. This resource will teach them a lot and may guide them in how to approach this and what to look out for.
I would be finding me a second opinion. If his sugars are running over 200. He has juvenile diabetes.
Yes! There are several reasons blood sugar can drop even if you don't have diabetes. Tumors of the pancreas or adrenal glands can cause this. Exocrine pancreatic insufficiency (lack of digestive enzymes) can cause this. Certain nondiabetic specific medications(eg certain antibiotics) can cause this. Malnutrition can cause this. Picky eaters can suffer from this. These are just some of the reasons you can have low blood sugar.
My youngest son has the same problem your grandson does. I am Type 1 (age 14 diagnosis). My oldest son was diagnosed with Type 1 at age 9. When my oldest son was diagnosed, my youngest son then 5 years old took it upon himself to also pee on the Ketosticks. We were shocked to see large ketones. However, his sugars were normal, so we didn't worry too much. As time passed, we would do periodic ketone and sugar checks. Sometimes he had ketones and slightly elevated sugars and sometimes not. His A1C was always normal. He developed hypothyroidism when he was 9 years old. When he was around 13 years old he began having issues with low blood sugar. It seemed he would randomly have severe low blood sugar. We started to checked his sugars 2 hours after meals, but they were always good. Please keep in mind that even nondiabetics can have sugars over 200 if they eat food (especially sweets) then test their blood sugar 30 minutes after they eat. Also, kids have different target ranges than adults. So then we did the glucose tolerance test. The results were inconclusive. His blood sugar ran a bit higher than what was considered normal for the first half of the test, but by the end of the test his sugars were back in normal range. His pediatrician was ready to diagnose him, but I wasn't convinced. Neither was my endocrinologist who was following his case as well.
We decided to look at other possible causes, and after lots of blood tests and imaging to look for tumors and such, we decided to just change how he ate. He was at the top of the growth chart in height but at the bottom of the growth chart for weight. We switched him to eating several times a day instead of what he was doing - almost no breakfast, light lunch, a few snacks after school and dinner when I forced him to come downstairs. As long as he ate something about every 3-4 hours he avoided the severe lows. Mom and Dad breathed a sigh of relief. He is 20 years old now and still fights low blood sugar when he goes too long without eating. What he doesn't have is a diabetic diagnosis.
My advice would be to not stress too much over this especially if your grandson is a picky eater. See what the pediatrician thinks about letting your grandson be a grazer, and consult a pediatric nutritionist. Be proactive about preventing low blood sugar. Instead of concentrating all his calories at meal time, spread the calories out over the whole day. Always have a baggie of his favorite snack at hand for him to munch away on and a juice box to chase those scary lows away! I hope all goes well with his future testing. Best of luck to your family.