I don't recall my family giving grit to our parakeets but it didn't seem to affect them healthwise. They died from other causes (i.e. neighbor's cat). :(
I store it indoors in my coffee bar (because it has a convenient sink, but I have an excessively large house because how many folks have a coffee bar?) and a small flock.
Kitchen or bathroom are fine too, for indoors. Garage, shed work as well if you don't want it in the house.
:) I don't have to imagine, there's been a few stories shared on here about exploding fermented feed.
If you're worried about flies, a layer of cheesecloth or a linen towel can be safely placed over the feed jar/bucket, as that still allows it to breathe.
Amount of water varies greatly with different feeds and with your climate/temps. For me, about 1" of water over is about right.
Best to not close the container. If you put on a lid, I'd just rest it on top, do not press on it at all. Otherwise build up of gas inside can cause an explosion...