There is no wrong answer here, but there is a wrong question, and it is "where would I wear this?" That question assumes a dress's value comes from its calendar placement, like it needs a scheduled event to justify existing. Your grandmother's dress has already done its job. It survived trends, family dinners, and decades of closet real estate. The real question is not whether it fits a dress code, but whether you are brave enough to wear a memory that might outshine the room. We say keep it, and not because of sentimentality. We say keep it because the moment you treat that dress like a costume instead of a relic, it becomes the most interesting thing you own.
The practical problem you are facing is not styling, it is permission. You have been waiting for a reason that feels grand enough, but here is the truth: the reason is you. That dress is too dressed up for casual and not formal enough for a gala, which means it is perfect for the chaos in between, like grocery store runs, coffee dates, or a Tuesday that needs a plot twist. Pair it with chunky sneakers and a leather jacket if you want to lean into the irony. Cinch it with a belt if you want to change the shape. Wear it with flats and a messy bun if you want to look like you just inherited a small European castle. The r/fashion community is already full of people asking the same thing, and the answer is always the same: stop asking if it flatters you and start asking if it makes you feel like you are getting away with something. Because that is the real test.
Now, about the "sell it" option. Sure, you could list it and make a few bucks, but you are not a reseller, you are a grandchild. That dress is not a transaction. It is a physical memory you can put on, and that is rarer than any designer piece you will ever buy new. The flattering question is a trap too, because "flattering" is code for "does it hide my body's flaws," and that is not the point of a dress that already has a history. The point is that your grandmother wore it before you, and now you get to decide what happens next. Style it for yourself, not for an occasion. Wear it to a picnic. Wear it to a gallery opening. Wear it to your kitchen at 7pm just to feel something. And if you still cannot bring yourself to put it on, then fold it neatly and keep it in a box, but do not call it a waste of space. Call it a story you are not ready to tell yet.
The concrete consequence is this: every month you leave that dress hanging unworn, you are practicing a small kind of forgetting. So take it out this weekend. Put it on. Look in the mirror and ask the only question that matters: "What would I do if I was not afraid of ruining it?" Then go do that. Because the dress is not fragile. Your grandmother survived enough to pass it down, so you can survive a little wear and tear too. And if you spill coffee on it, good. Now it has a new story, and so do you.