Grey is a full-fledged joinable NPC, but still a real dog. The only magic on him is his enchanted collar that gives 1 AC bonus. He has sensible interjections (Woof!), NPC banters (mostly NPC dialogues about him with the PC), a click dialogue (PID) if the PC feels like playing fetch or just needs someone to talk to. There are dialogue options that reflect the game story and I'll promise: Grey will always listen to your PC's woes. Grey initiates no dialogues so there is no friendship track and - I am really sorry, but no romance.
Grey comes with some items and more can be found throughout the game. He has his own kit: Wolfhound.
In BG1 there are two small quests, both available in BG city. The quests are also available and solvable without Grey in party. Where appropriate, Grey can be told to "search" for missing persons, in BG1 Brage and farmer Brun's son, in SoD the five missing refugees. This is realized in a way it doesn't spoil the quests too much, though, so do not expect too much help.
The mod is compatible with BGT, BG:EE, BG2, BGII:EE, and EET.