Yes, there are different grades. Grade one is the least extreme and grade 4 is the worst. By no means is LP the worst thing that can happen to a dog, but you must pay attention to his needs. I've read a lot of different first hand experiences with pups with LP. Some pups have a hard time with a grade 1 LP and they will even refuse to walk. I was so scared by those testimonials. Then I found out Kaji has LP. I didn't understand, he was fine. He ran, he jumped, he danced, not once have I ever seen him favor a leg and he's never refused to walk, and he has a grade 3/4 in both knees. For a grade 3/4 my reg vet recommended surgery immediately. I spoke to two other vets who discussed the pros and cons of surgery with me in detail instead of rushing me to surgery. Both said that one of the cons is a the dog getting LP again from a jump or normal doggy activity. After speaking to various vets and other dog owners who's babies have LP, I've decided against surgery. At least for now.
Instead, Kaji is on glucosamine supplements.
Cosequin Regular Strength (90 capsules)
It seems as though nothing bothered him in the first place, so why try to fix something that didn't currently bother him. I do watch his weight very carefully, because that affects the strain that is put on his knees. I even measure his food now so I know he's not overeating.
My advice to you is talk to your vet, and maybe a few more and decide for yourself what's the best route to take for your little one. Good luck!