It's true that most of the messages are for immersion only.
This is just a quick explanation of the coordinates, as I put them in my own reports.
The official SH3 map that came with the game is also replicated as a pull-down in the upper left corner of the Nav Map screen. In the lower right-hand corner of that map you'll see a box showing the extra coordinates. If I'm in BF12 I can look at that box and see that it is further divided into nine boxes, and each of those is further subdivided into nine more boxes. The upper left corner of BF12 is thus BF1211, then BF1212 and BF1213. Since the '1' box is in nines as well, the next square to the right is BF1221, then BF1222 and BF1223. The right side of the grid is BF1231, then BF1232 and BF1233.
The next row down starts with BF1214-15-16, going across to BF1236, and the next row is BF1217-19, going to BF1239.
This will explain it all better:
http://www.uboat.net/maps/grid.html