I wouldn't say they are necessary, but grading can be helpful. I think there can be found a happy medium. The current implementation of them is definitely not helpful in most contexts, but feedback on what you've learned is useful. Learning to accept criticism of your work, even harsh criticism you disagree with is another valuable lesson grading introduces.

Sadly, much of my generation is "offended" by even constructive feedback.

I think there is a good point here, but I don't think removing grading altogether would have a net positive effect.