Why do you think O'Connor has a monkey at "The Tower"?
The story is full of rather bizarre images, many involving animals, which is a strategy O'Connor uses to call attention to the grotesque nature of human beings, meaning that we are all different and it is through our differences that we ultimately come together (paradoxically). Significantly, this monkey is chained, symbolizing his limitations, just as all the people in the story are chained to their behaviors, expectations, and often lack of compassion as well. Thus, the monkey springs back into the tree "and got on the highest limb as soon as he saw the children jump out of the car and run toward him," creating a distance between him and them. In putting himself above them he feels safe, not unlike the grandmother feels safe when she criticizes others such as when she says "In my time...children were more respectful of the their native states and their parents and everything else."
Why do I think so? Several reasons.
First, there are many distinctions made in this book--between young and old, good men and bad, people like they are now and people like they were in the grandmother's time. I think the monkey is in here part to show another primate, and to show how close the kids in this story are to being monkeys. It is in part O'Connor's way of mocking humanity's egotism.
Second, it is realistic: it is the sort of weird detail that roadside America used to have in abundance.
Third, it is one of the many examples of grotesque details that give her stories mood.