Any ideas on what controls the size of the grains in a yellow butter cake? If I want smaller grains do I increase the milk or any suggestions? I have a problem with coarse grains.

You need to use a recipe that calls for cake flour.
Hugs Squirrelly

Also, on top of using cake flour, you want to do as little mixing as possible once the liquids (milk, water, egg) have been added to the flour.