Death is a natural event. Experts agree that children, even the very young, should not be shielded from the death of a loved one. Children have the capacity to recognize death as an event and the curiosity to ask questions about the event. The general advice is to talk to the child simply and truthfully about the death, in an age-appropriate manner.
Ask questions to determine what the child already knows about the situation. You may then explain the situation to him simply and honestly. For instance, you may say, "Grandma's heart got too tired and stopped working, so she died."
It is important to avoid giving answers that may confuse or frighten the child, such as "Grandma went to sleep and is not going to wake up" or "God took Grandma to be with the angels." While these phrases are meant to comfort and soothe, the child may actually interpret them in a far more literal sense. For example, the child might develop a fear of going to sleep because the same thing might happen to him.
Allow the child to ask questions if he wants, but do not pressure him if he doesn't respond. A younger child may ask questions such as "Where is Grandma now?" or "Is my kitty in heaven?" Older children may comprehend the finality of death more fully, and ask more abstract questions that are related to issues of faith, the meaning of life, etc.
For any age group, stick with truthful, simple answers in terms that the child can understand.