Traditional grotto (or grotti) are family-run caves or locations in the woods where they would cure and store cheese, meats, spirits, etc. Today, there are restaurants in the heart of villages or cities in Ticino that call themselves grotto and are not true grotto.
Grotto Morchino (http://www.morchino.ch/), on the lower slopes of Monte San Salvatore to the west of Lugano, is a very traditional grotto. Its history goes back many years, including a mention in Hermann Hesse's 1919 novel Klingsors letzter Sommer (Klingsor's Last Summer).
During the warmer months, you can enjoy your meals in the woods surrounding the restaurant; in cool weather, it is wonderful to sit inside by the fireplace and enjoy the company, tasty regional specialties, and a nice glass of wine. It's a very popular spot; it was packed when we arrived around 8pm on a Saturday evening. A good way to start is with a sampler plate of cold cuts. Ticino is well-known for its salamis, and they are very tasty. There was one item on the plate that I first thought was cheese but realized quickly that it was not. (My tour guide the next day was able to tell me that it was a very popular local delicacy that is basically a salted fat product, usually served with warm bread so that it will melt as you spread it.)
From there, we moved on to traditional dishes of polenta (a dish made from ground corn) and risotto (a type of pasta), some kind of roast pork, and a very good braised beef dish. The dishes are all very hearty and satisfying.
To top the meal off, we had shots of nocino, which is a local strong nut liquor. I'm not used to drinking shots, so I found it powerful, but the flavor was really good, and I think I could develop a taste for it.
Nocino is a very traditional Italian cordial. Young walnuts are picked on the Festival Day of St. John on June 24 . Recipes vary, although the one thing they can all seem to agree upon is that you should use 30 walnuts for each liter of alcohol and use lots of sugar. One recipe I heard was that the walnuts are crushed and soaked in a combination of grappa, coffee beans, cinnamon, vanilla, and sugar; other variants I found included ingredients such as orange, cloves, and juniper. The jar is then placed in sunlight for 40 days, and there are further steps in the preparation before the fresh batches are revealed in time for Christmas. It is excellent over ice cream!
The staff of Grotto Morchino was friendly and the service was excellent. If you're looking for a true grotto experience, I would recommend making the trip--it is only a 10-minute drive from the main train station.