Granularity is the level of detail considered and then represented in an analysis or query. The greater the granularity, the deeper the level of detail. With more detail, you can better understand the smaller components of your data and create a fuller picture.
For example, you have a calculated measurement that calculates cost per click (CPC) per media buy. The granularity is set to the media buy dimension, and the calculation is done on the values of each media buy key. By setting the granularity of the calculated measurement to a lower level, such as the creative level, the calculation now occurs at the creative key level when slicing the calculated measurement on any relevant dimension.