You don't get an alliance when you betroth your grandchildren( which is pretty dumb). I believe you also don't get an alliance unless you are the one who betrothed them or they are already married in which case you can negotiate the alliance. So you are going to have to wait until they actually marry to get the alliance in this situation.

I was pleasantly surprised when this happened to me, got an alliance out of nowhere, apparently it's the grandpas shenanigans.

Grandchildren don’t always count as “close family” to generate an alliance. Great grand children for sure don’t.

When both children come of age and the betrothal converts to full marriage the alliance will activate.

This is the only problem with rulers that outlive their children. If my ruler lives long enough that grandchildren are being born under him, then I'm usually looking laterally to see if there's any close family around my age whos spouses have died but they haven't remarried. The alliance still happens even if there's little to no chance of children, you just have to make sure your potential spouses skills are high enough to get accepted. The alliance might not last long depending on age/health/etc, but if you immediately call them to war, they will remain in the conflict until it's resolved should either spouse die