So how do you do this? My step-grandfather is 97 and in really poor health. I know it's just a matter of time. I am not close with him, but Holly knows who he is, and talks about him occasionally. Like, I know that if we went to my grandmother's house, and he wasn't there, she would definitely notice.
Everything I've heard says to not liken it to sleeping, or anything that could scare them. What's the best thing to say? We are not very religious, and she would have no concept of "him being with God" or anything like that.
I want to be as up front as you can be with a 2 year old. I was thinking of saying (whenever the time comes) something like, "Grandpa died. Sometimes when people get really old, or very sick, their bodies stop working, and they can't be with us anymore. That's what I mean when I say he died. We won't be able to see him anymore, but we can still look at pictures of him, and remember him."
Good? Bad? Confusing? Do I need to elaborate more?
If you've had to deal with this, what have you said to your LO? This is one of those things where I'm afraid you can scar them for life if you say the wrong thing! So I want to be as frank and truthful as possible, without scaring her.

Re: Explaining death to a toddler
Yeah, what you said
I don't think that is bad at all.
We had to go to a funeral in May and Ben had to be there. He had no idea what was going on and went outside to play during the service. I kept him away from her. I am an avoider and this time I felt like that was the best method. He met her twice so he doesn't miss her or anything. At the very end he saw her as we were leaving and said "Oh! She's sleeping!" I just said yeah and we walked away.
I don't think I scarred him for life though because he seriously had no idea what was going on. No idea who she was really or that she wouldn't wake up.
Oh and he had just turned 2. I think they become more perceptive every single day at this age. I don't know that I could even get away with avoiding if it happened tomorrow instead of 3 months ago.
Explaining death was much easier than I thought it would be actually. It is always a recurring conversation in our house though. Be prepared for either very little reaction at first or a whole slew of questions that may go in a completely different direction than you had planned!
When my dad died we explained that he went to heaven. We aren't big church goers either so this was he real first explanation of heaven and God. We tried to never use the words sick or hospital. For sick, I didn't want him to associate a little cold with going to heaven and for the hospital, I was still 30 weeks pregnant and we would be going to the hospital soon so I didn't want him to think hospital meant heaven either. Like you said, we told him that Grandfather had to go to heaven and that means we won't see him anymore but that we can always talk to him and look at his pictures. We will miss him a lot and when we do we can talk about him. The first few times we went to my mom's he would ask if Grandfather was going to be there so through teary eyes I would have to go over the conversation again. It gets easier to talk about it with him especially with his innocent little kid questions like "is God a fireman?". I said yes he was (my dad was a FF) and that God needed some help fighting fires in heaven so that's why he asked Grandfather to go to heaven. John will randomly ask questions or out of nowhere say that he misses his grandfather and wants to go see him. Or, like the other day he was playing on the slide at my mom's house and looked through the telescope and said "look Mommy, it's Grandfather up there!".
So, start simple and see where her questions take you. So sorry you are having to deal with this but I hope when his time comes it is peaceful for everyone.
I agree--kids can't discern the difference between being sick with a bad cold, and sick with a terminal illness or something. So using any reference to sick might not be best.