LOL - I love the allergies answer to why we're homeschooling! Yes - allergic to not learning at school.
I was thinking of saying something along the lines of "DS is just not a great fit in a regular classroom", and let them stew on that. I'm sure everyone will think he's ADHD or something, but whatever. It's something I'm more than happy to talk about if people ask for more info, but I'm not sure I want to run around like the lady who liked to brag her homeschooling kindergartner was reading at a first grade level.
The grade question is a good one too, but if you're homeschooling, you can just say "He's 7, but we're homeschooling, so he's not working at any particular grade level". If people ask for more info, I'll go into it, but otherwise he will be working at different grade levels for everything anyway. My first grader is a legitimate first grader this year, but when people ask what grade he's in now, it doesn't even feel right to say first grade. The better answer would be "He's auditing a first grade class, but we do our real learning after school!".