In today's domain ecosystem, you're not going to easily find a name which is easy to spell, pronounce, remember AND is free (or affordable) to acquire as a domain name. The vast majority of non-technical users are just going to google for your company, so your example seems a little contrived.

The first part of the conversation would go more like this:

Hey, what's your new site?

grinnit with two n's. So grinn dot it.

However, there is definitely a problem when a search for "grin it" on google doesn't find your site. Moreover when a search for "grin it photos" or "grinit photos" is also unsuccessful. That's definitely a problem. If the spelling of your website isn't immediately obvious (a la reddit), you just need to ensure that users can still find your site.

I don't think it's a horrible name. Seeing it in print makes it instantly memorable which is always helpful, they just needed some additional work on seo for the typos of their name. Calling it "piss poor marketing" is disingenuous and unnecessarily inflammatory.