The disguise of the wolf is almost laughable. So much so that it’s hard to imagine the exchange between Red and the wolf as something to be taken seriously. It’s almost playful, as if Red knew fully well that this was not her grandmother the entire time. So why the deception at all? Why doesn’t the wolf simply eat Red in the forest? That would certainly be the most convenient for the wolf instead of risking Red go somewhere else.
The story requires two things. First, it needs Red to be in the bed. This tells us the kind of attack that she suffers. While it can’t state sexual matters explicitly—censors in the Middle Ages would not allow such a thing—it can draw the inference. This is an attack that happens in a bed, which can only mean sex.
Second, the masquerade is also part of the story. It must be. Red taking off her clothes demonstrates a kind of willingness for what will happen, which is fitting in a coming of age story. This is an assertion that she has become an adult, that she is not only of age, but willing to have sex. The masquerade as Grandma isn’t, and never could be, realistic. It’s the symbolism that is necessary. Dressing up as Grandmother is about being a person that Red trusts.
The wise women were trusted by the villagers during their most vulnerable times, especially illness. The story wants to make sure we know that the wolf is masquerading as someone trusted in order to put Red at ease. Yet, at the same time, Red knows that this is not Grandmother as the story explicitly calls out the differences between Grandmother and the wolf by going down the list of the wolf’s traits.
So what’s going on? Easy. This is a sexual assault by someone trusted.