Harrumph!
Basic good manners are that if your son rescinds an invitation, he does it himself. So, before you pass the parcel back to him, have a think about what is going on, give your self time to pause & reflect. Then tell him directly & with no equivocation to be an adult & tell them himself.
Sorry to hear that your son & his wife had such an awful experience & understandably they are cautious. Stuff happens in life & in time they will need to come to terms with this otherwise the risk is that their fear will be passed on & restrict their children’s lives. If he speaks directly with his grandparents, then that is honest & direct.
Covid difference of opinion - no appealing to either side at this late stage.
Prepare to have a lively Christmas with your parents, make the most of your time with them. They will not be with you forever, however vaxxed & lively they are these days.
Should your son & DiL persist in not addressing their fears - I am not saying that they ignore their feelings or throw all common sense away - particularly in light of rational Covid risks as we go along, then I suggest that you reconsider how much of your own time you give to them e.g. childcare etc.
Sounds harsh? Disproportionate? Not really, because we all have to learn, throughout our lives, that other people have conflicting or competing priorities & that we all negotiate with each other all the time.
We are all adjusting as we go, & your priority is to put yourself first. Your child is now a fully fledged adult, let him do things his way, & you adjust your offer so that your needs are prioritised.
It is a curious piece of doublethink that you have manage your life that you are fit & Covid free to meet their childcare arrangements, but your parents who are vaxxed/low risk can be barred.
‘Hey Son, telling you direct in advance, I can no longer manage my life so that I meet your Covid avoiding childcare requirements. Plenty of nurseries nearby for you to use’.
Bear in mind, should you, or your OH/one of your parents need extra care support & you chose to meet this need, likely you’d drop the childcare arrangement.
Piggy in the middle? You are the only person who can make a change, adjust what you offer & see how things pan out.