Why a life stone is put into a weapon, how the four grades differ, why top-grade stones of level 76 flood the market while high-grade ones stay rare, and where the ordinary and mid-grade stones are concentrated.
Putting a life stone into a weapon, we pursue three goals: we keep the weapon from dropping if we have a great many PKs, we make our weapon glow even at +0, and we try to catch the needed skills from augmentation. And while the first problem can be solved by inserting an ordinary or mid-grade stone, the glow and a proper skill we can get only from a life stone of the High or Top grades. The augmentation system itself is described in the article Weapon augmentation: Life Stones, gemstones and possible bonuses.
It has to be noted at once that on Interlude both are very rare, and a drop chance of 1 in 50,000 is a usual thing, so we either arm ourselves with patience or buy them up from other players.
Top-grade
What strikes the eye at once is that the drop of top stones is negligible compared with the high-grade ones, but this is compensated by the gigantic chances of knocking the top stone 
Top-Grade Life Stone: level 76 out of the Tyrannosaurus. That is why players constantly hang around here, and that is why the market is flooded with these tops of level 76. I do not recommend beating the Pterosaur, since the chance of a stone from it is many times smaller than from the Tyrannosaurus. And let me remind you once more that of the three Tyrannosauruses on the island only one has the top stone in its drop.
High-grade
I want to note that the mobs from which high-grade stones drop are several times more numerous than those from which Top-Grade Life Stones drop, but that means nothing: thanks to the drop of tops on Primeval Isle there is a steady flow of those tops to the market, which cannot be said of the high-grade ones, so high-grade stones such as 
High-Grade Life Stone: level 76 are rather rare and dear, and if a high-grade stone has dropped for you, it is time to rejoice.
Ordinary and mid-grade
Many builds are being remade now, with augmentation added roughly as it was on Interlude on the official European servers (that is, a proper skill can be caught not only from high and top stones but from mid and ordinary ones too). Besides, I read somewhere long ago that a bonus to stats (that is, +1 STR, +1 DEX and so on) could be caught only from ordinary stones. But in any case, first find out on the server you play on how this works for you.
The small ordinary stones are concentrated in the locations Pavel Ruins and Archaic Laboratory, and the level 76 ones, 
Life Stone: level 76, in the Pagan Temple.
The level 76 mid-grade stones, 
Mid-Grade Life Stone: level 76, also drop well in the Pagan Temple, and in general the good chances are only in the top locations. No, you can always knock out a couple from non-top mobs too, but to put this process on stream you will have to climb into the very wilds.
Stones of every grade exist for levels 46, 49, 52, 55, 58, 61, 64, 67, 70 and 76; on the page of each stone there is the full list of the monsters it drops from, with chances.