When inserting MIDI notes with the Pencil tool (using the Line, Triangle, Square, or Random shapes), the Grid value determines the Note On location and the Default Note Duration value determines the note duration (see Default Note Duration).
For example, if the Default Note Duration is set to quarter notes and the Grid is set to half notes, drawing with the Line Pencil tool creates alternating quarter notes and quarter note rests.
If the selected Grid value is shorter than the Default Note Duration, the Grid value determines both the Note On location and note duration for notes inserted with the Pencil tool. For example, if the Default Note Duration is set to quarter notes and the Grid is set to eighth notes, drawing with the Line Pencil tool creates a sequence of eighth notes.