This line spoken by grace serves as a contrast to what the red dress stands for in the eyes of Antoinette. As mentioned before, the red dress serves as a a connection to her past, an element of excitement, a way for her to grasp small increments of free-will, and as a comfort for her. Right after Antoinette embraces the dress, grace Grace offers her the "grey wrapper" and suggests that she let goput the dress down. Opposite of red, the color "grey" is often connected with dullness and boredom. The imagery of the contrast between "red" and "grey" serves as becomes a metaphor for Antoinette's past and present. Grace is physically giving her this "grey wrapper" as if to force out any memories that she has of the pastin order to literally "wrap" Antoinette in "grey", shutting out any excitement that the Red Dress may bring her. This adds to the lack of control that Antoinette has in her present situation, as she is unable to dictate her own decisions or to do things for herself.
This contrast between red and grey is also seen elsewhere in the passage under examination. Inclusions such as a red "fire", more mention of the "red dress", and one more another instance where the "grey wrapper" is mentioned are scattered through outthroughout. These are the only two colors that are alluded to in Antoinette's narration, creating almost a psychedelic feel and deepening the readers understanding of how her encroaching insanity has inhibited her perception.