Okay, we're going to preface all our fancy symbolic analysis with what we think is probably the best bit of war-related trivia: did you know that hand grenades existed way back in the 700s? True fact… and they were filled with something called Greek Fire, which is as cool as it sounds.
But if you look closely at the Holy Hand Grenade, it looks a lot more like a 20th century grenade than anything to come out of the Dark Ages. So this holiest of weapons is more than a few centuries ahead of its time—it's clearly a satirical reference to religious war and destruction in general.
The cutting satirical commentary doesn't stop there, though—this is Monty Python, after all. The HHGOA is visually a parody of the Sovereign's Orb, a relic made for the coronation of King Charles II in 1661. That's still three (or seven, depending on when you think the movie actually takes place) centuries after the film's time period.
Finally, there's the Antioch reference. Antioch was an ancient Greek city where, during the First Crusade, someone reportedly found the lance that pierced the side of Jesus as he was crucified. It became known as the Holy Lance of Antioch… although its authenticity was debated. The lance often appeared in Arthurian legends along with the Grail. You can get some more details here.
So not only is the Holy Hand Grenade of Antioch filled to the brim with historical references, but it represents the insanity of war (killing a bunny with a grenade sure seems to define "overkill"). Even more than that, it satirizes and criticizes the much too-frequent association between war and religion.
The whole episode drives home that point with Arthur somberly reading from the sacred "Book of Armaments" in which God commands the readers on the proper use of the Holy Hand Grenade. C'mon, now. It's true that some pretty epic things go down in the Bible (floods! plagues! men killing armies with a donkey's jawbone!) but nowhere is there an instructional manual on hand grenade use.