Anyone remember back in 2014-15 people dicussed >Why do faunus have only one trait from an animal, and why do they still have human ears if they already have cat or bunny ears?
And the main ideas seemed to be something related to Grimm, to provide a legitimate motivation for why humans tend to mistreat them.
Humans tried to create better humans through genetic engineering. That created 3 distinct groups: humans, faunus and Grimm. Humans and faunus had souls/consciousness, and thus were deemed "acceptable". Grimm didn't, and were deemed "disposable". Unfortunately, the ruthlessness and numbers of the Grimm caused massive casualties among the humans and faunus, forcing them into a small number of cities and villages contained by natural barriers. Cut off from the rest of the world they once controlled, the humans and faunus became the remnant of the civilization they once were.
Of course the grimm origins are no longer a question in the fandom (although the Silver-Eye Grimm sorta dangled more idea bait for fans