Look into GPU particles. You dont really need to use mesh for sand grains so you can just create grain-shaped GPU particle sprites and have hundreds of thousands of them.
How would I go about a sand simulation (in general powder simulation). Can I just generate 100’000 sand grain meshes or is there a better way to do this?
Ok, and do they collide with other meshes??
Yes. Check out Content Examples project, there are examples of GPU particles with collision in it.