My grandfather refuses to bathe. He has never been like this before. He refuses to change his clothes and sleeps in them. How do we handle?

With dementia things can become very confusing.
There is the fear of slipping and falling. Is the shower safe for him? Does he have to step into the tub/shower or does he have a walk in shower? Even a walk in there is the fear of slipping. Get a walker from a resale shop and place it in the shower so he has something to hold onto. Get a shower chair that he can sit on and have more stability.
then there is the noise in the shower.
as a Physical Therapist told me the head and torso are vulnerable spots and that is just where the water hits. Try a hand held shower so he can control where the water goes.
As far as changing clothes I had the same "problem" with my Husband. Luckily he would change to pj's at night and fold up his clothes and put them by his chair. When he went to bed I would pick up the soiled ones and replace them with clean, when he took off the pj's in the am and hang them on the bathroom door I would do the same, grab the soiled ones and replace with clean. I never said anything or made a big deal of it.

If there is a possibility of him wandering off there are devices that you can attach that will track where he is.

Have a caregiver (home health aide) show up 3 times a week and “help” him get a shower.

pick a man who is pretty much no nonsense....just come in and do it.

my Dad was pretty confused about most things the final couple years...but, an order from a commanding officer always did the trick.

for some reason the memories of serving in the Navy really were the very last to go.

I'm quite certain you are dealing with dementia/Alzheimer's here with your grandfather, as he is displaying many characteristic behaviors common with the disease. Grandpa needs to get to the doctor and be diagnosed so you can plan his care accordingly. Withholding privileges from him is not a good tactic to use to get him to bathe, as he is not doing things to 'spite' you but acting from a brain that isn't working properly anymore. His 'wandering' and getting lost is a serious issue that requires him to either be placed in a locked Memory Care community or else have locks on YOUR doors that will prevent him from getting out and hurting himself. I used to care for an elderly man who suffered from dementia & wandering. His family thought it was 'no big deal' until he wandered off one night, fell in the street, suffered a subdural hematoma on his head, and passed away the next day in the hospital. He wasn't found until a few hours after he'd fallen.

Please get your grandfather to the doctor right away, okay? Getting him to bathe is one of the lesser issues you're facing right now. If you'd like more information about dementia & Alzheimer's in general, and tips on what to do and not do, Google the topic and lots of info will come up. Here is an example on how to encourage a dementia sufferer to bathe:

7 tips to get someone with Alzheimer's to take a bath
Establish a daily routine. ...
Make the bathroom warm and comfortable. ...
Use positive reinforcement and don't argue. ...
Say “we” not “you” ...
Use a hand-held shower head to reduce fear. ...
Make sure there are no surprises or guesswork needed. ...
Use extra towels for comfort and warmth.

Here is another link for you to read for helpful tips dealing with Alzheimer's/dementia:
https://www.helpguide.org/articles/alzheimers-dementia-aging/tips-for-alzheimers-caregivers.htm

Best of luck!