A display device and a display method thereof are provided. The display device includes: a first base substrate (10) and a second base substrate (20) which are arranged oppositely and a liquid crystal layer (30) between the first base substrate (10) and the second base substrate (20), the display device further includes: a waveguide grating (40) between the liquid crystal layer (30) and the first base substrate (10), the waveguide grating (40) including a waveguide layer (401) and a grating layer (402) on one side of the waveguide layer (401) facing the liquid crystal layer (30), and the grating layer (402) being in contact with the liquid crystal layer (30); and a collimation light source (50) on a lateral surface of the waveguide layer (401), light emitted by the collimation light source (50) being coupled into the waveguide layer (401) and output from the grating layer (402). The display device can regulate an amount of the light output from the waveguide grating by controlling changes of the refractive index of the liquid crystal layer so as to implement gray scale display.