I'm confused between diffraction grating and polarization. In a polarizer, there are tiny slits that allow only one direction of light right? In diffraction grating, there are also tiny slits and the interference occurs. So wouldn't polarizers cause diffraction grating??? Or are there particular width of the slit that determines either diffraction grating or polarization?
A diffraction grating is a device with a spatially varying phase. It may look like a series of slits but it's more like a bunch of lines carved into glass so that at different points the light sees a different amount of glass and thus different phase. It can transmit both vertical and linear polarization, though they won't be diffracted the same. The width of the lines and the wavelength of the light influences the angle of diffraction.
A polarizer is a device that selectively attenuates one polarization. There are wire grid polarizers just as you've said that absorb light in one polarization in order to achieve this. I don't know to about their construction, but I imagine that the slit width would provide a trade-off between how well you've polarized your light and how much light is left after it.