The grant proposal will describe the work you want to do, and why you feel the work is beneficial. If funded, the expectation is that you will work on the project described in the grant, or something similar. For example, if the project you proposed is not successful, you may decide to work on something slightly different.
There is a lot of flexibility as to how you spend the grant to accomplish the goals of your proposal; the PI (Principal Investigator) can decide to use grants to hire students, buy equipment, etc. in support of the proposed work. The University receives a percentage of the grant, and the PI will use the grant money to pay the tuition of his or her grad students. The grant may also pay a part of the PI's salary.