Sure there's a grammatically correct usage for y'all. It does the job for English that ihr does in German, and "ye" used to do in English. Ye was the plural you, and thou was the singular.

(Later ye took on different meanings.)

My husband used to work in Alabama, and he noticed the all-y'all construction there. Perhaps it's used when more than one y'all is called for. More data are needed.

Amos has never heard it used to address a close friend or intimate connection. So perhaps there is an element of the formal in y'all.

Thanks for the Beach Boy and Lovett lyrics.