AC was/is a redesignation from what were originally termed Aircraft Mechanics. Of those designations, there is: Aircraftman, Leading Aircraftman, Senior Aircraftman (in order of progress). Prior to those designations, you had Air Mechanic Second Class (AC2 for example), Air Mechanic First Class, Chief, etc.
At various times there have been insignias for these roles, invariably these were two, three or four bladed propeller arm patches, or some variation of that, but since training and responsibility tends to go hand in hand with promotion, often the normal military rank badges sufficed.
In military terms, LAC, AC1 etc are trade roles, indicative of a level of skills and training received, rather than actual ranks, thus they are more to do with whether you can work unsupervised and what you can work on, than whether you rank above an AC if you are an LAC or whatever. In practice, it often works out the same as if they were actual ranks though, based simply on experience, with the old hands telling the newer ones what to do, although for certain tasks, there is a legal responsibility attached to what some can work on, so the roles do often pertain to specific tasks, thus there is informal seniority as well as formal. Then as now, there are lots of colloquialisms for such roles, such as Ack Em, Ack Emma, Plonk, Plumber etc.
If you read
James McCudden's Flying Fury autobiography, you can see the progress he makes through such roles, starting off with being assigned mundane tasks anyone could do, such as scraping the rust off rigging wires, through to quite complex engine maintenance, aircraft rigging and looking after machine guns, and thence to being an observer, before getting his wings. But he also progresses with military ranks roughly at the same rate, even though he also attends courses to further his skills, and it is likely that your grandfather underwent similar progress as far as what he did was concerned.
Roehampton/Shotley is where BTDs (Balloon Training Depot) were located and I'm fairly certain there was some seaplane related stuff there too. Both RFC and RNAS personnel were trained there. Crystal Palace was where the RNAS Drafting Office was located, and also where a good deal of training took place in various skills, everything from carpentry to servicing engines.
Al