I am not sure of the difference between these two phrases, especially the meaning of on reality.
I found the phrase lost his grip on reality; can I use in instead of on in this case?
On in this case is tied to grip; I could have a grip on a baseball bat, but not a grip in one.
In reality refers to the narrative of it in relation to time. So no, you must use on in the case of your example.
I think, in your example, "on" is used because that is the preposition to use with "grip". It is not about what to use with "reality".