My grandchildren are 8(granddaughter) and 5(grandson), my daughter lives with her boyfriend, whom has a 2 yo son, his ex states that their son needs to have a room of his own in order to spend the night, is it against the law for my grandchildren to share a bedroom? Can she really keep him from spending the night?

No not at this stage they cant. And besides one could sleep on the couch too. At those ages it shouldn't be a problem for a little while unless the boy keeps badgering the girl.

A 2 yr old needs their own their own room? Unless that is written into the visitation agreement, I doubt if a court would support and charge her with contempt if she refused to honor the visitation agreement.

No, don't worry about your grandchildren at this point at least. I don't thing that the two year old having their own room is in the visitation order but that is something that he and his ex will have to work out amongst themselves (most likely with the court).