Purée watermelon pieces in processor. Strain watermelon purée into large pitcher, pressing on solids in strainer to extract as much juice as possible. Discard any solids in strainer. Add simple syrup, lemon juice, and grenadine to pitcher; stir to blend. Stir in gin. (Can be prepared 6 hours ahead. Refrigerate.)
Stir 3 cups ice cubes into watermelon lemonade. Pour into tall glasses. Garnish with lemon twists, if desired.