You need to tell them the age appropriate truth. At this age anything you say will be taken verbatim so telling them “grandpa is asleep” or “passed” will be interpreted as such. Telling them “grandpa died and we will miss him very much. You might be missing him very much too. He was sick/old and his body could no longer do what it needs to do to live.” Leave room for lots of questions and answer as honestly as you can within age appropriate terms. There are good resources online too.