Access method of an instance

In order to understand what's happening and how to fix this, you need to understand the way the building blocks of unity games are constructed.

A GameObject or a Transform does not have a function called SetTexture(). A GameObject can have a component attached to it and this component can have a method called SetTexture().

How do you know there is a method called SetTexture()? If you added a script to the prefab and the script has that method, you should do:

 GameObject gridPart  = (GameObject)GameObject.Instantiate(squarePrefab);
         gridPart.transform.parent = transform;
         
         YourScriptClassName script = gridPart.GetComponent<YourScriptClassName>();
         script.SetTexture();

But if you're for example talking about the SetTexture method of the Material class, you should:

 GameObject gridPart  = (GameObject)GameObject.Instantiate(squarePrefab);
         gridPart.transform.parent = transform;
 
         MeshRenderer mr = gridPart .GetComponent<MeshRenderer>();
         mr.material.SetTexture("_MainTex", yourTextureVariable);
 

You can mix and match but you have to stay true to Types in your code:

 using UnityEngine;
 using System.Collections;
 
 public class Test : MonoBehaviour {
 
     public GameObject squarePrefabGameObject;
     public GameObject gridPartGameObject; 
 
     public Transform squarePrefabTransform;
     public Transform gridPartTransform; 
 
     void functionX () 
     {
         //Option 1
         // If the prefabs are declared as GameObjects, you have to stay true to the type...
         gridPartGameObject  = (GameObject)GameObject.Instantiate(squarePrefabGameObject);
         // you can still access the transfrom easily...
         gridPartGameObject.transform.parent = transform;
 
         MeshRenderer mr = gridPartGameObject.GetComponent<MeshRenderer>();
         mr.material.SetTexture("_MainTex", _Texture);
 
         // if you added a script with yur own functions to the prefab, you need to get the script first...
         YourScriptClassName script = gridPartGameObject.GetComponent<YourScriptClassName>();
         script.SetTexture();
     }
 
     void functionY()
     {
         // Option 2
         // If the prefabs are declared as Transforms...
         gridPartTransform  = (Transform)GameObject.Instantiate(squarePrefabTransform);
         gridPartTransform.parent = transform;
         
         MeshRenderer mr = gridPartTransform.GetComponent<MeshRenderer>();
         mr.material.SetTexture("_MainTex", _Texture);
         
         YourScriptClassName script = gridPartTransform.GetComponent<YourScriptClassName>();
         script.SetTexture();
 
 
 
         // a "transform" has a reference to "gameObject" and vice versa, so whichever your prefabs are declared as
         // you can access one via the other
         GameObject instantiatedGameObject = (GameObject)GameObject.Instantiate(squarePrefabGameObject);
 
         // a GameObject has a transform that describes its orientation and position 
         gridPartTransform = instantiatedGameObject.transform;
 
         // a transform is connected to a GameObject
         gridPartGameObject = gridPartTransform.gameObject;
     }
 
 
 }