Squeezed between the often-tempestuous Tasman Sea to the west and steep forested cloud-shrouded mountains to the immediate east, the town is the largest in this sparsely populated part of New Zealand. Long known as a coal-mining town, the population has declined as the industry has waned. The population was 216 in the 2006 Census, a decline of 27 from 2001. Several neighbouring towns, such as Denniston, have become virtually ghost towns.
The name "Granity" was given to the town by gold prospectors, in reference to the large quantity of granite in the area.
Granity School is a co-educational full primary school (years 1–8), with a decile rating of 4 and a roll of 47. The natural erosion of the beach, at a rate of 40 centimetres (16 in) per year, is threatening the school buildings, and a stopbank has resulted in the school grounds protruding further out onto the beach than adjoining properties.