I agree with the previous posters' suggestions. Distract him without calling too much attention to the grinding, or he may do it more for the fun of it.
However, as someone who comes from a family who tends to clench and grind our teeth in our sleep, I can say with certainty that there can -- and will -- be damage if it continues. Especially if, as is the case in our family, the grinding and clenching is unconscious -- we do it in our sleep.
Most of my molars have had to be crowned, as I've clenched so hard I've cracked them. My jaw bone has built up bony growths all around it, as a protective measure against the pressure of the clenching -- now I have bony lumps under my gums.
My son started grinding in his sleep as a toddler. I couldn't sit next to him all night long, waking him and reminding him not to grind. Now his dentist and orthodontist have said that he's wearing his teeth down, and -- like me -- will need to wear a protective mouthpiece to sleep.
Your son may be doing this grinding in exploration, but you don't want him to make a habit of it!