Case of the Birthday Forgetting Grandpa
Question: My dad forgot my daughter's second birthday. How should I react?
Answer: You daughter is the miffed party here, not you. She's the one who just got stiffed an Elmo doll, after all. But she's two, and wouldn't have known it was her own birthday had you not told her.
It's the same for your dad. If you didn't remind him, then he simply forgot. This doesn't mean that he's not completely taken with his granddaughter. It just means that he's older and has more birthdays to forget.
You single out your dad, with no mention of mom. I take this to mean that he's on his own. Of the older relatives I have left, it's always the female counterpart who remembers the birthdays. This is partly generational and partly female wiring. Point being: Your dad may not be accustomed to remembering milestone dates in the first place.
I'd let this one slide.
Help him remember going forward by sending him an invite to your daughter's birthday party next year. Even if he doesn't live close enough to attend, it will serve as a gentle reminder.