What does one call this method of grid fitting?
I don't think this has a name, but you could just apply a clustering algorithm to the X-coordinates of the red dots and separately to the Y-coordinates. For example, in Mathematica:

img = Import["http://i.stack.imgur.com/DfhTN.png"];    
blobs = ComponentMeasurements[ColorNegate@Binarize[img], "Centroid"][[
   All, 2]];    
{meanX, meanY} = Mean /@ FindClusters[#] &amp; /@ Transpose[blobs];    


This will find "clusters" in the X- and Y-coordinates of the red dots:

Show[img, 
 Graphics[{Line[{{#, 0}, {#, 480}}] &amp; /@ meanX, 
   Line[{{0, #}, {640, #}}] &amp; /@ meanY}]]




(If you want to implement the clustering yourself, k-means is a good starting point: In a nutshell, you start with random cluster centers; then assign each point to the nearest cluster center; then update the cluster centers to the mean of the values assigned to them. Repeat until convergence, split clusters if the assigned points spread too far.)

The grid you're looking for is just the lines in between these clusters:

inBetween = Mean /@ Partition[Sort[#], 2, 1] &amp;;
Show[img, 
 Graphics[{Line[{{#, 0}, {#, 480}}] &amp; /@ inBetween[meanX], 
   Line[{{0, #}, {640, #}}] &amp; /@ inBetween[meanY]}]]