Short, sensational plays specializing in the gruesome or horrible. Sometimes extended to other art forms as well. Stephen Sondheim's Sweeney Todd has been described as a member of the genre, though it is not short and shares little of the form of those plays the term originally referred to.
The name derives from Le Théâtre du Grand Guignol, a small Parisian theatre which specialized in such performances, though the development of the form predates that particular theatre. Plays of the genre first became popular in various small Parisian theatres in Montmartre around the turn of the 19th century, spreading to England and America. Le Théâtre du Grand Guignol and the term (Grand Guignol) date from a rather later period in the form's evolution. When first used, the term referred more to decadent Parisian cabarets of the sort performed in that theatre.
In Anne Rice's Interview With the Vampire, the Théâtre des Vampires is probably a fair example of Grand Guignol at its most decadent.
The form may have mutated, with radio and television, to inspire such teleplay showcases as The Twilight Zone, The Dark Room, Tales from the Crypt and others which often feature a startling, "tomato surprise" ending, a typical feature of many Grand Guignol theatricals.
However, contemporary historians and student of the movement seem fairly fixated on the notion that the form was devoted to a kind of extreme naturalism, and was most often centered on plausible horrors, rather than those with supernatural origins. Trainspotting may be far more in the tradition of Grand Guignol than, say, L’œuvre du Freddy Krueger.
As an aside, in the Bonus Features for the DVD release of Tim Burton's movie version of Sweeney, there is included a documentary that covers both the history of the original Grand Guignol theatre, and extensive interview and performance excerpts from a San Francisco theatrical troupe attempting to revive the tradition in the new century. In passing, those featured in the documentary mentioned the Saw and Hostel movie franchises as prime candidates for inclusion as members of a Grand Guignol Nouveau genre.
Also possibly comparable to the German Sturm und Drang movement, but with far fewer heady artistic pretensions among its practitioners.