Hi Lynn!
The grid looks like it is underneath the letters. If so, it might have been part of a two-stage deal. In the 1980s, I used vinyl decals which required placing a sheet of paper coated with a tacky glue on the face of the decal before peeling off the backing. The backing would be removed, leaving the elements of the decal in the same relationship on the paper in reverse. I would apply the whole thing, knit down the decal, then remove the paper, whose glue was less adhesive than the decal's glue. What you have may be some variant of this system.