It means "who".

The 'que' in this sentence serves as an indirect command signifier. They want the 'abuelo' to tell them a story when they find him, thus the use of the subjunctive after. Example if you're talking about someone you don't like, you might say 'que se vaya a !@##@$' or a more refined example might be, 'que te vaya bien la presentación'.

-Charlius-

Que is not a pronoun here, a good version is Gus's. However, the correct one is Charlius's.

¡Que no te vayas! Don't leave dude!

Que + subjunctive : one kind of command

Hoy se prefiere usar una construcción ****Que+(pronombre/s)+subjuntivo sin pronombre al final.** **

Que venga María en oposición a: venga (usted), María.

Esta construcción también sirve para enfatizar una orden: Que te lo comas

Any idea on why the subjunctive is used?

Is it because the sentence wishes to say?:

We are going to look for Grandpa who might tell us a story.

There is somethng wrong with the statement. I would write it this way

Vamos a buscar al abuelo para que nos cuente un chiste. or Vamos a buscar al abuelo que nos contara un chiste.