Coverage grading is an option used to rank the test cases based on the number of functional coverage points hit by the individual test case. Grading option can be used to analyze and remove redundant test cases which is targeting the same functionality. This will help to optimize the regression run and save simulation time.
In random test run scenario it also helps in identifying the random seeds which provides maximum coverage.It will be a good idea to go for functional coverage grading when the verification environment and test cases are frozen and suitable functional coverage numbers are achieved. if your test bench is constantly in development and changing ,using the same seed that gave you good coverage before may not do so again since the randomization may have been affected by the changes in the source code.
Command to generate functional coverage grading in VCS is
urg -dir ( *.vdb )