A grim smile doesn’t indicate someone doesn’t know what’s going on. I understand it as being close to a sinister smile. Like he was laughing at whatever caused OP to stutter, whether it was a speech impediment or nervousness, and drew joy from it. Had the guy responded that he thought OP was having a medical issue, things could have gone differently. But he didn’t and OP did exactly what he should have done. The offender and people around him have now been educated and that’s good for everyone.