The Shaper has the ability to interweave different 'stories' - not necessarily facts, as Grendel knows that humans are not the 'good' creatures that they make themselves seem - into a seamless whole, and make it sound true and possible. In other words, the Shaper's power of illusion and craft overpowers the truth of nature, and consequently creates meaning and possibility. Though Grendel has seen the truth and knows it, his mind wavers and doubts by the persuasive nature of this 'magic' that the Shaper performs.
