To LesterP: The real answer is that trust is important to your so-called "locals." The asking "Where you grad?" is likely rooted in seeking commonality of community, and therefore a basis of trust. It's possibly a folkway that goes back to a time when it was of life or death importance to know what interconnections and 'ohana might be shared upon meeting someone new. It's since evolved into "It's a small world, eh?" 
That said, kama'aina are often skeptical toward malihini (mainly those who outwardly display ignorance and arrogance). Outsiders may perceive the probing for commonality as something other than what it is, which marks that person as a malihini potentially unworthy of trust.