Grandpa taught Olive to dance that way because....

He clearly established himself as a sexist pig earlier in the film.

He advises Dwayne he should "f'k a lotta women." He doesn't tell him to find a nice girlfriend or anything, but to go out and get some @ss, date women just to sleep with them, turn every woman you look at into a number, etc. Because clearly to have slept with a high number of hot broads is one's ultimate goal; which is behavior that would get women labeled as sluts but would improve the status of the guy.

So of course he would teach a little girl how to do a sexy dance for an audience. In his mind, Olive is going to eventually work as a stripper or some other position that uses sex to further her place in the world. He told her straight-out he didn't love her for her brains or personality, but because she's beautiful. That's pretty telling of his attitude about women. If he'd advise a teenage boy to sleep around, then he'd certainly train a little girl how to be like one of those easy broads that become just another tally for promiscuous men.

This movie does have some merits, but I can't help finding the ending disturbing. The family applauds Olive for exploiting herself sexually in front of an audience and tell her that Grandpa would be proud. I can't consider that a "happy ending." Olive is going to be one messed up kid.

I wish Dylan Thomas was real so I could tell him he's awesome.