Large-scale Grids that aggregate and share resources over wide-area networks present major challenges in understanding dynamic application and resource behavior for performance, stability, and reliability. Accurate study of the dynamic behavior of applications, middleware, resources, and networks depends on coordinated and accurate modeling of all four of these elements simultaneously. We have designed and implemented a tool called the MicroGrid which enables accurate and comprehensive study of the dynamic interaction of applications, middleware, resource, and networks. The MicroGrid creates a virtual Grid environment – accurately modeling networks, resources, the information services (resource and network metadata) transparently. Thus, the MicroGrid enables users, Grid researchers, or Grid operators to study arbitrary collections of resources and networks. The MicroGrid includes the MaSSF online network simulator which provides packet-level accurate, but scalable network modeling. We present experimental results with applications which validate the implementation of the MicroGrid, showing that it not only runs real Grid applications and middleware, but that it accurately models both their and underlying resource and network behavior. We also study a range of techniques for scaling a critical part of the online network simulator to the simulation of large networks. These techniques employ a sophisticated graph partitioner, and a range of edge and node weighting schemes exploiting a range of static network and dynamic application information. The best of these, profile-driven placement, scales well to online simulation of large networks of 6,000 nodes using 24 simulation engine nodes.