What does "call somebody's bluff" mean (in the context)?

I can’t understand the meaning of this expression in the context.

‘Granddad was saying he was good for nothing, every badness was possible with him, but he didn’t drink and never had, so at least there was that one thing, one thing only that could nearly be seen as a good thing. My father called his dead bluff. I walked him home from his last session. I haven’t a bob left now, he said, and if we went over this minute to my father’s grave and dug him up, he’d be face down inside in the coffin.’

(Donal Ryan ‘The Spinning Heart’).

So, as I get it the grandfather said that the only thing the father will not do is to become a drunkard, and in order to spite him, the father drank out the farm, and by doing so, he called the grandfather’s dead bluff.

I’ve read various definitions of the expression ‘to call somebody’s bluff’, but still nothing makes sense to me.

How can I paraphrase this sentence?

Can it mean something like:

My dad accepted the challenge of his dad.

Or:

My dad fooled his dad.

Or something completely different?