In Chapter 14, Grim tells Max that Max's father is out on parole. If you will recall in Chapter 13, Max loses his self-control when Mrs. Addison tells him that a request has been made by the parole board on behalf of his incarcerated father. At this point, Mrs. Addison doesn't tell Max that his father will be out on parole shortly. In fact, she doesn't even get to explain what his father's request is, because Max's response is so explosive.

So, when Grim, Max's grandfather, tries to explain why he and Gram has been quarreling, Max asks whether his father has escaped from prison. At this point, Grim admits that Max's father will be up for parole. Max is of the opinion that this was a terribly 'dumb' decision for the parole board to make. Grim tells Max that he has just 'hit the nail on the head' with his response. This just means that Grim agrees with Max's assessment of the situation. Another way to look at it is Grim telling Max that he (Max) is absolutely right in his reasoning. You can also say that Max's remark hits the bulls-eye or hits the mark.